Investment for growth is at record lows for S&P500

This is a syndicated repost courtesy of True Economics. To view original, click here. Reposted with permission.

Interesting chart via @DavidSchawel showing changes over time in corporate (S&P500 companies) distribution of earnings:

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In simple terms:

  1. Much discussed shares buybacks are still the rage: running at 31% of all cash distributions, second highest level after 34% in 2007. On a cumulated basis, and taking into the account already reduced free float in S&P 500 over the years, this is a massive level of buybacks.
  2. ‘Investment for growth’ – as defined – is at 51% – the lowest on record.
  3. Meaningful investment for growth (often opportunistic M&As) is at 38%, tied for the lowest with 2007 figure.
S&P 500 firms are clearly not in investment mode. Despite ‘Trump incentives’ – under the TCJA 2017 tax cuts act – actual capex is running tied to the second lowest levels for 2018 and 2019, at 26% of all cash distributions.

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