Shareholder yield is a financial metric that captures the total return a company provides to its shareholders, expressed as a percentage of its market value. It combines three key elements:
- Dividend Yield: The return shareholders receive through dividend payments.
- Buyback Yield: The benefit shareholders receive from the company buying back its own shares, which can increase the value of remaining shares by reducing the total number of shares outstanding.
- Debt Reduction Yield: The benefit shareholders gain when the company reduces its debt, potentially enhancing the company’s financial stability and future profitability.
Why Shareholder Yield Is Important
Shareholder yield is valuable for several reasons:
- Comprehensive Indicator of Value: Unlike the dividend yield alone, which only considers cash dividends, shareholder yield gives a fuller picture of how a company is returning value to shareholders, considering buybacks and debt reduction as well.
- Focus on Capital Efficiency: Companies with high shareholder yields tend to be efficient at using capital to benefit shareholders, reflecting management’s commitment to shareholder value.
- Stability in Uncertain Markets: In times of market volatility, high shareholder yield can signal financial strength and stability, as companies returning value consistently may be better equipped to weather downturns.
- Potential for Long-Term Outperformance: Research shows that companies with high shareholder yields can outperform those that rely solely on dividends, as buybacks and debt reductions can enhance long-term returns.
Here are Validea’s top 10 high shareholder yield stocks for November 2024. These stocks not only have high shareholder yields, but also score highly according to our quantitative models based on investing legends like Warren Buffett, Peter Lynch and Ben Graham.
Further Research
