The Late Cycle Lament The Dual Economy Minsky Moments and Other Concerns

Stock Market Indicators:
S&P 500 Buybacks &

Dividends
Yardeni Research, Inc.
December 21, 2018
Dr. Edward Yardeni

516-972-7683
eyardeni@yardeni.com
Joe Abbott
732-497-5306
jabbott@yardeni.com
Mali Quintana
480-664-1333
aquintana@yardeni.com
Please visit our sites at

www.yardeni.com
blog.yardeni.com
thinking outside the box

Table Of Contents Table Of Contents
Buybacks & Dividends 3-6
Buybacks 7
S&P 1500/500/400/600 Divisors 8
Buybacks & Dividends 9
Buybacks & Dividends as % of Operating Earnings 10
S&P 500 Sectors Buybacks 11
S&P 500 Sectors Cumulative Buybacks Since Q1-2009 12
S&P 500 Sectors Dividends 13
December 21, 2018 / Stock Market Indicators: S&P 500 Buybacks & Dividends Yardeni Research, Inc.
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Buybacks & Dividends
Figure 1.
1000 1000
S&P 500 BUYBACKS
(billion dollars, annualized)
800 Q3 800
4-Quarter Sum (720.4)
600 600
yardeni.com
400 400
200 200
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Standard & Poor’s.
Figure 2.
500 500
S&P 500 DIVIDENDS
(billion dollars, annualized) Q3
450 450
400 400
350 350
4-Quarter Sum (444.3)
300 300
yardeni.com
250 250
200 200
150 150
100 100
50 50
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page 3 / December 21, 2018 / Stock Market Indicators: S&P 500 Buybacks & Dividends Yardeni Research, Inc.
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Figure 3.
250 250
S&P 500 BUYBACKS
(billion dollars, quarterly)
200 Q3 200
150 150
yardeni.com
100 100
50 50
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Standard & Poor’s Corporation.
Figure 4.
120 120
S&P 500 DIVIDENDS Q3
100 100
80 80
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60 60
40 40
20 20
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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Figure 5.
3000 3000
S&P 500 DIVIDENDS & BUYBACKS
2750 (billion dollars, annualized) 2750
Nov
Buybacks
2500 2500
Dividends
2250 2250
S&P 500 Index
2000 2000
yardeni.com
1750 1750
1500 1500
1250 Q3 1250
1000 1000
750 750
500 Q3 500
250 250
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Figure 6.
900 900
S&P 500 BUYBACKS Q3
750 (billion dollars, annualized) 750
600 600
450 450
300 300
150 150
0 0
13 13
12 S&P 500 FORWARD EARNINGS YIELD & CORPORATE BOND YIELD 12
(percent)
11 11
10 S&P 500 Forward Earnings Yield* (6.7) 10
9 BoA Merrill Lynch AA-AAA 9
8 Corporate Bond Yield (4.4) 8
7 12/14 7
6 6
5 5
Nov
4 4
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3 3
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
* Forward earnings (time-weighted average of consensus operating earnings estimates for current and next year) divided by S&P 500 stock price index.
Source: Thomson Reuters I/B/E/S, Standard & Poor’s and Bank of America Merrill Lynch.
www.yardeni.com
Figure 7.
1400 1400
S&P 500 BUYBACKS & DIVIDENDS
(billion dollars, annualized) Q3
1200 1200
1000 1000
800 800
Total* (1164.7)
600 600
400 400
200 200
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1000 1000
800 Q3 800
600 Buybacks* (720.4) 600
400 400
200 200
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
500 500
Q3
450 450
400 400
350 Dividends* (444.3) 350

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300 300
250 250
200 200
150 150
100 100
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
*4-quarter sum.
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Buybacks
Figure 8.
600 600
TOTAL GROSS ISSUANCE OF STOCKS MINUS S&P 500 BUYBACKS
(billion dollars)
400 Total Gross Issuance 400
of Stocks Minus
S&P 500 Buybacks
(annualized)
200 200
0 0
-200 -200
-400 -400
Q3
Corporate Equities: Net Issuance

Nonfinancial Corporate Business
-600 (4-quarter sum) -600
Q3
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-800 -800
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Federal Reserve Board and Standard & Poor’s Corporation.
www.yardeni.com
S&P 1500/500/400/600 Divisors
Figure 9.
50000 8
S&P 1500 DIVISOR* S&P 1500 DIVISOR*
48000 (y/y percent change) 6
4
46000
2
44000
0
42000 12/21
-2
40000 12/21
-4
38000 -6
96 98 00 02 04 06 08 10 12 14 16 18 20 22 96 98 00 02 04 06 08 10 12 14 16 18 20 22
9750 10
S&P 500 DIVISOR* S&P 500 DIVISOR*
(y/y percent change) 8
9250
6
8750 4
12/21
8250 2
0
7750 12/21
-2
7250 -4
96 98 00 02 04 06 08 10 12 14 16 18 20 22 96 98 00 02 04 06 08 10 12 14 16 18 20 22
3000 10
S&P 400 MIDCAP DIVISOR* S&P 400 MIDCAP DIVISOR*
2500
0
2000 12/21 -5
1500 -10
-15
1000
12/21 -20
500 -25
96 98 00 02 04 06 08 10 12 14 16 18 20 22 96 98 00 02 04 06 08 10 12 14 16 18 20 22
2500 10
S&P 600 SMALLCAP DIVISOR* S&P 600 SMALLCAP DIVISOR*
2000
0
1500 -5
12/21
-10
1000
12/21 -15
yardeni.com
500 -20
96 98 00 02 04 06 08 10 12 14 16 18 20 22 96 98 00 02 04 06 08 10 12 14 16 18 20 22
* Divisor is used to ensure that changes in shares outstanding, capital actions, and the addition or deletion of stocks to the index do not change the level of the index.
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Figure 10.
1400 1400
S&P 500 YIELD FROM BUYBACKS & DIVIDENDS
1200 Q3 1200
1000 1000
Buybacks + Dividends
800 (billion dollars, trailing four-quarter) 800
(1164.67)
600 600
400 400
200 200
8 8
7 Yield (%) 7
6 Buybacks (2.93) 6
Dividends (1.81)
5 Buybacks + Dividends (4.74) Q3 5
4 4
3 Q3 3
2 Q3 2
1 1
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0 0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Figure 11.
225 225
S&P 500 BUYBACKS Q3
200 200
175 175
150 150
125 125
100 100
75 75
50 50
25 25
0 0
1.4 1.4
1.2 1.2
1.0 Buybacks as a % of 1.0

S&P 500 Market Cap (0.83)
.8 Q3 .8
.6 .6
.4 .4
.2 .2
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.0 .0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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Buybacks & Dividends as % of Operating Earnings
Figure 12.
1400 1400
S&P 500 BUYBACKS, DIVIDENDS, & OPERATING EARNINGS Q3
1200 (billion dollars, trailing four-quarter) Q3 1200
Buybacks (720.4) Operating Earnings (1276.8)
1000 1000
Dividends (444.3) Buybacks+Dividends (1164.7)
800 800
Q3
600 600
400 Q3 400
200 200
0 0
150 150
Buybacks+Dividends
as percent of
125 125
Operating Earnings (91.2)
100 100
Q3
75 75
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50 50
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Figure 13.
1500 1500
S&P 500 EX-ENERGY BUYBACKS, DIVIDENDS, & OPERATING EARNINGS
1250 (billion dollars, trailing four-quarter) 1250
Q3
Buybacks (693.5) Operating Earnings (1213.3) Q3
1000 Dividends (404.4) Buybacks+Dividends (1097.9) 1000
750 750
Q3
500 500
Q3
250 250
0 0
175 175
Capped at 150% due to extreme values.
Buybacks+Dividends
150 as percent of 150
Operating Earnings (90.5)
125 125
100 100
Q3
75 75
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50 50
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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S&P 500 Sectors Buybacks
Figure 14.
250 30
S&P 500 SECTORS BUYBACKS INDUSTRIALS
200 (quarterly, billion dollars) Q3 25
Total (203.8) (15.2) 20

150
Q3 15
100
10
50 5
0 0
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
50 100
CONSUMER DISCRETIONARY INFORMATION TECHNOLOGY
40 Q3 80
30 (19.7) (82.3) 60
20 Q3 40
10 20
0 0
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
25 12
CONSUMER STAPLES MATERIALS
20 10
(10.0) (3.0) 8
15
6
10 Q3
4
Q3
5 2
0 0
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
30 2.0
ENERGY REAL ESTATE
25
1.5
20 (7.3) (0.5)
15 1.0
10
Q3 Q3 .5
5
0 .0
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
50 12
FINANCIALS COMMUNICATION SERVICES
40 Q3 Q3
9
30 (40.6) (10.1)
6
20
3
10
0 0
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
40 10
35 HEALTH CARE UTILITIES
8
30
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25 (14.5) (0.5) 6
20
15 Q3 4
10
2
5
Q3
0 0
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Note: Real Estate sector data start Q2-2016.

www.yardeni.com
S&P 500 Sectors Cumulative Buybacks Since Q1-2009
Figure 15.
5000 625
S&P 500 SECTORS CUMULATIVE Q3 INDUSTRIALS
4000 BUYBACKS SINCE Q1-2009 Q3 500
(quarterly, billion dollars)
3000 375
Total (4480.7) (488.6)
2000 250
1000 125
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
750 1500
CONSUMER DISCRETIONARY Q3 INFORMATION TECHNOLOGY
600 Q3 1200
450 (673.8) (1160.7) 900
300 600
150 300
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
500 120
400 Q3 Q3
90
300 (421.4) (95.6)
60
200
30
100
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
300 8
ENERGY Q3 REAL ESTATE Q3
250
6
200 (259.7) (6.8)
150 4
100
2
50
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
750 60
FINANCIALS Q3 COMMUNICATION SERVICES
600 Q3 50
(689.5) (49.2) 40
450
30
300
20
150 10
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
700 20
600
HEALTH CARE Q3 UTILITIES
Q3 15
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500 (619.8) (15.4)

400
10
300
200 5
100
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Note: Real Estate sector data start Q2-2016.

www.yardeni.com
S&P 500 Sectors Dividends
Figure 16.
120 12
S&P 500 SECTORS DIVIDENDS Q3 INDUSTRIALS Q3
100 (quarterly, billion $) 10
(11.3)
(115.2)
80 8
60 6
40 4
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
12 25
CONSUMER DISCRETIONARY INFORMATION TECHNOLOGY
10 20
(8.2) (14.5)
8 Q3 Q3 15
6 10
4 5
2 0
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
14 4
Q3
12 Q3 3
(12.7) (3.1)
10 2
8 1
6 0
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
12 7
ENERGY REAL ESTATE 6
Q3 Q3
10 (10.4) (5.8) 5
4
8
3
6 2
1
4 0
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
25 35
FINANCIALS COMMUNICATION SERVICES Q3
30
20
(15.7) (32.7) 25
15 Q3
20
10 15
10
5
5
0 0
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
16 7
HEALTH CARE Q3 UTILITIES
14 Q3 6
yardeni.com
(15.2) (6.1)
12
5
10
4
8
6 3
07 08 09 10 11 12 13 14 15 16 17 18 19 20 07 08 09 10 11 12 13 14 15 16 17 18 19 20
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Stock Market Indicators:

S&P 500 Buybacks &

December 21, 2018

Dr. Edward Yardeni

Please visit our sites at

thinking outside the box

4-Quarter Sum (720.4)

Source: Standard & Poor’s.

Source: Standard & Poor’s.

Source: Standard & Poor’s Corporation.

Source: Standard & Poor’s Corporation.

Source: Standard & Poor’s.

600 Buybacks* (720.4) 600

350 Dividends* (444.3) 350

Corporate Equities: Net Issuance

Source: Federal Reserve Board and Standard & Poor’s Corporation.

Source: Standard & Poor’s Corporation.

1.0 Buybacks as a % of 1.0

Source: Standard & Poor’s Corporation.

Source: Standard & Poor’s.

Source: Standard & Poor’s Corporation.

Total (203.8) (15.2) 20

Note: Real Estate sector data start Q2-2016.

450 (673.8) (1160.7) 900

500 (619.8) (15.4)

Note: Real Estate sector data start Q2-2016.

Source: Standard & Poor’s.

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