Excerpt from Barron’s quoting DataTrek’s Nick Colas:
…. “With stock buybacks waning, how companies manage their dividends “will take on new importance as investors make judgments about equity valuations,” concludes a note by investment research firm DataTrek Research.
The note’s author, Nicholas Colas, refers to a “social aversion” toward buybacks, which until recently had been a popular way for large U.S. companies to return capital to shareholders….
….But “dividends are ready and able to step in if, as we suspect, buybacks are about to spend some time in the wilderness,” Colas says, calling dividends the new buybacks.
“Dividends,” he adds, “are more powerful signals of management confidence in the business than buybacks since they are meant to be sustainable through a cycle”….
Read the full article here on Barron’s!