Natalie Parkinson
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Natalie Parkinson in Gainers & Losers,

17 dividend stocks that may rise up to 26% in the next year

Making the case for dividends and buybacks

The world is awash with cash, as the Federal Reserve and other central banks have unleashed stimulus after stimulus since the credit crisis of 2008. Lower borrowing costs and a long economic expansion in the U.S. mean that domestic small- and mid-cap companies are in “great shape” as they’re holding a lot of cash, according to Steven DeSanctis, an equity strategist at Jefferies.

Using his bank’s data, as well as information provided by FactSet and Russell Investment Group, DeSanctis and his research team calculated that, from the end of 1985, companies that reduced their share counts through buybacks while paying dividends outperformed the overall U.S. stock market significantly:

  • Companies that reduced share counts achieved an average annual total return of 14.1%, compared with 6.7% for companies that let share counts rise or stay at the same level.
  • Companies that paid dividends had an average annual return of 11.7%, versus 6% for non-payers.
  • Companies that had done both — reducing share counts while paying dividends — had an average annual return of 13%, against an average return of 9% for the broader market.

Jefferies’ small- and mid-cap picks

Full article you can read here:

What is your opinion?