Musings on Markets · 2025-03-05
· 456d
Corporate Cash Return Policy: Dividends vs Buybacks in 2025
Analysis of how public companies globally decide to return cash to shareholders through dividends and buybacks. The article explores the theoretical framework of residual cash flows, contrasts it with real-world dysfunction driven by dividend stickiness and institutional inertia, and documents a significant shift in the US away from dividends toward stock repurchases since the 1980s.
Metrics in this report
Dividend Initiation Threshold
earnings stability requirementqualitative
typical practice
US and global public companies
S&P 500 Dividend Payment Stickiness
majority of firms% of firms
do not change dividends annually
US large-cap equities
US Dividend to Buyback Transition Period
mid-1980s to 2024years
shift period
S&P 500 companies