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A big factor in any historical analysis of dividend yield is the changing emphasis on stock buybacks. Some investors prefer this approach for tax reasons. This impact has been mitigated somewhat by the reduced tax on dividends -- a reduction that might expire.

Corporate finance officers also find the buyback to be more flexible, permitting a more generous total package. Since companies hate to cut dividends, prudence requires them to maintain a safe cushion in payment levels. A combination of buybacks and dividends works well.


Ditto to the above comment. For more info check out the paper Payout Yield by Boudoukh, Michaely, Richardson, and Roberts here:


And a post on my blog here:


Bill Spetrino

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Bill Spetrino

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