Net payout return: An alternative to the traditional returns approach based on dividends and share repurchases

Derek Brawn and Aleksandar Sevǐc

Finance Research Letters, 2015, vol. 13, issue C, 66-73

Abstract: We examine two alternative measures of equity returns incorporating stock repurchases as well as dividends, the other incorporating new equity issuance. We compute stock returns for 30 S&P 500 firms using all three approaches and find that stock repurchases have on average increased average annual returns by almost 2% and geometric returns by +1.6% per annum, whilst new share issuance reduces average returns by 1.1% a year. We also find similar results at the aggregate portfolio level. We argue that investors should be concerned about total shareholder flows and not the amount of cash distributed through any particular channel.

Keywords: Stock repurchase; Equity issuance; Dividends; Equity returns; Payout methods; Equity risk premium (search for similar items in EconPapers)
JEL-codes: G10 G14 G20 G32 G35 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:13:y:2015:i:c:p:66-73

DOI: 10.1016/j.frl.2015.03.002

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