Is the dividend/buyback glass half-empty or half-full?
Defenders of dividends and buybacks point out the value returned to shareholders when there are few other investment options. Critics argue for using the cash to build a stronger business for the long term.
A recent study by the Boston Consulting Group supports the critics’ viewpoint. Their research suggests that companies that maintain short-term shareholder returns by “cutting costs, increasing dividends, and pursuing share buybacks” do less well over the long term.
And a recent article in Business Insider describes one investor that is pressuring companies to look to the long term – and it just happens to be the world’s largest asset manager, BlackRock.
So as Capital One asks: what’s in your wallet? And what are you going to do with it?