S&P 500 companies ramped up repurchases

Last year, the S&P 500’s earnings totaled about $1.7 billion, up 71% from the prior year. The figure was 33% higher than 2019’s $1.3 billion, which was before the COVID-19 pandemic struck and hurt profitability.

The S&P 500’s cumulative dividends were $511.2 billion in 2021, up from 2020’s $483.2 billion. Payouts have dipped during periods of economic softness, such as in 2009 and 2020, but resumed their ascent when conditions improved. Since 1998, dividends have grown at about a 6% compounded annual rate.

In 2021, these companies spent $881.7 billion on buybacks, up 70% from 2020 and the highest total since at least 1998. The amount paid has varied over the years.

While S&P 500 companies increased the dollar amount paid for dividends, the percentage paid out of operating earnings was 29.2% last year, about 500 basis points lower than the median from 1998 to 2021. The firms spent nearly 51% of earnings on buybacks, 150 basis points higher than the median.

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