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Shareholder Return is to make a part of the profits and hand-made funds earned by the company.
The most common method is dividend and stock purchase.
The dividend is the return that the shareholders can receive cash. In-house stock purchases can lead to improvement of value per share and support under stock price by buying shares from the market.
Viewing shareholder returns makes it easy to understand how to use the company’s money, how to invest in growth, and whether it is a mature company or a growth company.
However, it is not a company that has a lot of shareholder returns.
The most important thing is not only the height of dividend yield, but also the co ity of performance, cash flow, financial and return.
What is shareholder return?
Shareholder Return is an act that a company returns profits and surplus funds to shareholders.
The usage of money earned by a company is as follows:
| 使い道 | 内容 |
|---|---|
| Growth investment | Used in factories, R&D, human resources, M&A, etc. |
| Repayment | Finance |
| Cash | Prepare for depression and investment opportunities |
| Shareholder Return | idends and shareholder purchases |
The shareholder returns are partially or indirectly profitable to shareholders.
Shareholder Return is the entrance to see the corporate capital policy.
Example 1: idend
The dividend is to pay cash to shareholders.
企業idends per year or twice a year are common in Japanese companies. Depending on the company, we may pay quarterly dividends.
The benefits of dividends are to earn cash revenue without selling stocks.
On the other hand, dividends are not always paid. If the performance is worse, it may be deducted or distributed.
idend Yield
指標idend yield is the indicator used frequently when viewing dividends.
idend yield (%) = Annual dividend ÷ Share price × 100For example, if the stock price is 1,000 yen, the annual dividend is 50 yen, the dividend yield is。.
50 ÷ 1,000 × 100 = 5%However, the higher the dividend yield means safer.
As the stock price decreases greatly, only the yield on the appearance may be higher. It is a so-called high dividend ラップ.
Example 2: Buying own shares
Buying your own shares is to buy your own shares.
When you buy your own shares, the number of shares on the market decreases, making it easier to increase profit and value per share.
The image is as follows:
Reduced number of shares issued
↓
Increase profit per share
↓
It may be supported under stock evaluationIn particular, in U.S. companies, stock purchases are important as a shareholder return measure. The number of companies in Japan is increasing by focusing on capital efficiency and ROE improvement.
However, you can buy your own stock.
If you buy too high, the efficiency may be worse as you use the funds. It is also necessary to pay attention to cases where funds to be turned into growth investments are too low.
Difference between dividend and stock purchase
株主idends and stock purchases are both shareholder returns.
| 項目 | idend | Shares |
|---|---|---|
| Shareholder Cash | Yes | No direct |
| Easy to understand | High | Easy to understand |
| Taxes | It may be taxed when receiving dividends | There is a possibility that tax can be forwarded to the sale |
| Impact on stock price | Easy to evaluate stability | Improve production and supply and demand |
| Company | Stable Profit Mature Companies | A company with a surchargeable stock price |
idends are easy to understand for shareholders.
In-house stock purchases do not receive direct money, but the effect of increasing the value per share is improved.
Which one is better depends on the company's growth stage and the stock price level.
Why shareholder returns are important
If you look at the shareholder returns, you can see how the company uses money.
For example, if you are a growing company, it may be more reasonable to turn profits into R&D and capital investment. On the other hand, if you are a mature company, it may be more likely to be evaluated by shareholders.
The company’s policy is divided into three main categories:
| 方針 | 見方 |
|---|---|
| Growth investment | Aim for future sales and profit expansion |
| Shareholder Return | stable profit to shareholders |
| Focus on financial improvement | Prioritize debt repayment and cash securing |
The shareholder returns will be useful to read the company's maturity and the capital policy of the management.
Characteristics of companies with high returns
There are several common points for companies with high shareholder returns.
Typically, it is a mature company that is stable and profitable.
For example, telecommunications, banks, insurance, infrastructure, trading companies, etc. is a business that is easy to attract shareholder returns.
Of course there are exceptions. Even economically sensitive stocks can be greatly reduced in the year of good performance, and if there are too many surplus funds in growth companies, you may buy your own shares.
The important thing is to see how many reductions can last.
Note 1: High dividends are not safe
The most important thing for beginners is to see high dividends like safety assets.
There are two reasons why the dividend yield is high.
High dividends
or
Stock price is lowerIn the latter case, performance deterioration and deduction risk may be hidden.
If you look at the yield only, you may lose a lot before receiving the dividend.
Note 2: Poor reduction
It is necessary to pay dividends more than profits, or to buy your own shares until you increase your debt.
Even if the shareholder is happy in a short period of time, future investments may fall.
Please check the following points when viewing shareholder returns.
| ation | Reasons to See |
|---|---|
| Profit | Become a dividend |
| Cash Flow | Is cash actually earned? |
| idend | How many dividends of profits |
| Interest-bearing debt | Is it not reduced by debt |
| idends | Is it co ity? |
It is not as good as there are many reductions.
Note 3: Growing companies may have less reductions
Growing companies may have fewer dividends or stock purchases.
This is not necessarily a bad thing.
The benefit of new business, R&D, capital investment, and adoption may increase corporate value in the future.
For example, if you invest in a business expansion, it may be useful for shareholders, rather than making a high dividend for large growth companies.
When you see a company with low shareholder returns, let's think about "cannot be reducted" or "priority to growth investment".
For beginners
For beginners, it is enough to see the following three.
| View | Point |
|---|---|
| idend | Check the reason if it is too high |
| idends | View trends in increase, maintenance, and reduction |
| Company stock purchase history | Are you constantly aware of capital efficiency? |
If you’re a step further, check your payout ratio and sales cash flow.
The company that continues dividends is often stable not only profit but also ability to earn cash.
idend reinvestment and profitability
Shareholder returns also affect long-term returns.
In particular, when receiving dividends and reinvestment is not finished, the compound effect becomes easier to work.
The basic formula of compound interest is as follows:
A = P(1 + r)^n| Signs | 意味 |
|---|---|
| A | Future assets |
| P | 元 |
| r | Annual Return |
| n | Year |
When reinvestment of dividends, the dividends purchased by dividends will be formed to generate additional dividends.
This is why shareholder returns are important for long-term investment.
Shareholder Return is a mechanism that enables companies to make profits and surplus funds to shareholders.
The most common method is dividend and stock purchase.
idends are easy-to-understand reductions that can be received in cash, which can lead to improvement of value per share and support under stock price.
However, it is not judged only by dividend yield.
What should be seen is the co ity of performance, cash flow, dividend orientation, financial and return.
First of all, it is easy to understand if you start from confirming the history of dividend yield, dividend transition, and stock purchase.