The shareholder payout boom continues, but can companies afford the high levels of dividends and shareholder buybacks? Are investors encouraging companies to accelerate their own demise, rather than acting as responsible stewards of capital?
Does anyone else have a growing sense of unease about the level of dividend payouts and share buybacks going on at the moment? They are a significant part of what is driving valuations of many US banks, for example, but they speak to a lack of sustainability over the long-term.
Are these companies investing enough for their future growth? And if they are borrowing to finance these pay outs to shareholders, does that spell doom for the years to come?
Investors should be careful about
celebrating the payout bonanza.
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A quick cuppa with Faith Ward, Chief Responsible Investment and Risk Officer, Environment Agency Pension Fund