Low Dividend, High Return: Is Less More?
- Many investors are drawn to high dividend yields, but these figures can be misleading.
- Vail resorts, for example, has a current yield around 6%.
- It encompasses the current payout, dividend growth, and the impact of share buybacks.
Forget chasing high dividend yields; discover why a high shareholder yield is far more critical. this piece dissects the pitfalls of solely focusing on dividends, revealing why shareholder yield—encompassing both dividends and buybacks—offers investors a superior method for evaluating returns.We analyse Visa’s notable 3.4% shareholder yield,vastly exceeding its dividend yield,and spotlight ConocoPhillips,whose substantial 8.7% shareholder yield positions it as a potentially attractive investment. News Directory 3 provides valuable insights on how too calculate shareholder yield.Explore these key metrics and learn to identify companies committed to rewarding investors. Discover what’s next for savvy investment strategies.
conocophillips: An 8.7% Shareholder Yield Makes It a Buy
Updated May 27, 2025
Many investors are drawn to high dividend yields, but these figures can be misleading. A high yield often masks a declining share price or other financial difficulties. Instead, consider shareholder yield, which accounts for both dividends and share buybacks, offering a clearer view of how a company rewards its investors.
Vail resorts, for example, has a current yield around 6%. Though, inconsistent winter weather has hampered visits to its resorts, slowing dividend growth and straining its free cash flow. A strike by ski patrollers further damaged the company’s performance, leading to notable underperformance compared to the broader market.
shareholder yield provides a more comprehensive metric. It encompasses the current payout, dividend growth, and the impact of share buybacks. Buybacks reduce the number of outstanding shares, boosting earnings per share and other key metrics.
Visa, a payment-processing giant, exemplifies the power of shareholder yield.While its current dividend yield is a modest 0.66%, its dividend has surged 392% over the past decade. Visa has also aggressively repurchased its shares, reducing the share count by 21% in five years. This combination results in a substantial shareholder yield.
To calculate shareholder yield, add the amount spent on share repurchases to the total spent on dividends over the preceding 12 months, then divide that sum by the company’s market capitalization. Visa’s shareholder yield is 3.4%, significantly higher than its dividend yield.
ConocoPhillips (COP) presents an even more compelling possibility. The oil producer’s dividend yields 3.6%, supported by a safe payout ratio. More impressively, ConocoPhillips’ shareholder yield reaches 8.7%. This stems from $3.7 billion in dividend payouts and $5.7 billion in buybacks over the past year.
The company’s commitment to shareholder returns, combined with potential benefits from relaxed permitting processes, positions ConocoPhillips as a timely buy.
What’s next
Investors should monitor ConocoPhillips’ performance as permitting processes evolve and the company continues its buyback program. Keep an eye on free cash flow and dividend growth to assess the sustainability of its shareholder yield.