Masters in Business At the Money: Getting More Out of Dividends with Shareholder Yield
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Oct 30, 2024 Meb Faber, Co-Founder and CIO of Cambria Investment Management, dives into the world of shareholder yield, highlighting its broader definition beyond just dividends. He explains how including share buybacks and debt paydowns can enhance returns. The discussion weaves through market analyses of large, mid, and small caps, revealing the performance differences with traditional strategies. Faber also touches on the landscape for shareholder yield ETFs and even connects personal growth through therapy, emphasizing holistic investor well-being.
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Dividends and Stock Returns
- Dividend reinvesting contributes substantially to market returns over time.
- However, dividends are only one factor driving stock returns.
Defining Shareholder Yield
- Shareholder yield is the total cash payout to investors.
- It includes both cash dividends and net stock buybacks (buybacks minus share issuance).
Cash Return and Company Strength
- Companies returning cash through dividends or buybacks often have strong cash flow.
- Apple, for example, uses both methods, demonstrating a holistic approach.