Companies continue to increase their shareholders’ returns through buybacks and cash dividends.

These two expenditures, combined, reached $214.4 billion in the fourth quarter – the second highest level (Q3 2007 holds the record at $233.2 billion) and three times the Q2 2009 Bear market level ($71.8 billion). Helping companies do this are record earnings, record cash-flow and record cash reserves; pushing companies are activist investors and the growing concern within board room over outside holders ‘coming in’.

While dividend payments are historical high, the payout rate remains low, with dividends being 36% of As Reported earnings compared to an historical 52% (from 1936). Buybacks need to be measured against issuance, and for Q4 more companies decreased their diluted share count, even as purchases slowed. I expect this trend of greater shareholder return to continue throughout 2014 (ain’t no bodies opinion but my own).

Q4,’13 buyback takeaway -> companies buy fewer shares, but issue even less, reducing their share count, and pushing up EPS
Q4,’13 buybacks increased 30.5% to $129.4B from Q4,’12 $99.1B, buy are up only 1.0% from Q3,’13 $128.2B level
2013 buybacks increases 19.2% to $475.6B from 2012 389.8B -> just keeping up with the average of daily prices are also up 19.2%
Share counts go down, as companies buy more shares than they issue (it’s not just what you buy, but what you issue)
For Q4,’13, 276 issues reduced their diluted share count (263 in Q3), with 185 increasing them (188 in Q3)
Significant changes of at least 1% in the quarter increased, with 112 issues reducing their count (106 in Q3,’13) and 24 increasing them at least 1% (28 in Q3,’13)
For 2013, 272 issues reduced their diluted share count, with 200 increasing them
Significant changes of at least 4% for the year were 83 issues reducing their count and 39 increasing them at least 4%
Of the 401 issues which reported buybacks in 2013, 339 of them pay a dividend, with 196 of them spending more on dividends than buybacks
Cash (S&P Industrials Old) sets a sixth consecutive record high -> $1.3 Trillion, the equivalent of 94 weeks of net income siting on the books (here and abroad), earning very little, but getting a lot of attention

Information Technology maintained its dominance of buybacks, accounting for 26.7% of all buybacks in Q4,’13, up from 25.9% in Q3
Materials and Utilities (a minor player) significantly increased their buybacks in Q4,’13

This article was written by Howard Silverblatt, senior index analyst, for S&P Dow Jones Indices.