Repatriated Cash to Drive Stock Buybacks 30% Higher to $780B in 2017 - Goldman Sachs

November 21, 2016 12:27 PM EST
Get Alerts AAPL Hot Sheet
Price: $109.95 +0.77%

Rating Summary:
    61 Buy, 9 Hold, 5 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 17 | Down: 27 | New: 28
Trade AAPL Now!
Join SI Premium – FREE

Find out which companies are about to raise their dividend well before the news hits the Street with StreetInsider.com's Dividend Insider Elite. Sign-up for a FREE trial here.

Strategists including David Kostin at Goldman Sachs expect S&P 500 companies to spend $2.6 trillion in cash in 2017, with 52% going to growth, and 48% in returns to shareholders via dividends and stock buybacks. They note cash balances currently stand at historical highs, totaling $1.6 trillion (ex-Financials) or 12% of assets compared with a long-term average of 7%.

Kostin expects share buybacks will rise by 30% to $780 billion in 2017, driven by corporate tax reform, including repatriation. They estimate $150 billion or 20% of total buybacks will be driven by repatriated overseas cash. Excluding the repatriation boost, they estimates buybacks will rise by 5%. The forecast dividend growth of 6%.

Companies expecting robust buybacks: Apple Inc. (NASDAQ: AAPL), Dow Chemical (NYSE: DOW), Bristol-Myers Squibb (NYSE: BMY)

They see Capex rising 6% to $710 billion as Energy capital spending stabilizes. After plunging 45% since 2014, energy accounts for 19% of S&P 500 capex. They forecast 1% growth in Energy capex next year. S&P 500 ex-Energy capex will rise by 7% in 2017. R&D spending will grow by 7% to $290 billion led by Information Technology and Health Care. Meanwhile, they expect cash spending on M&A will rise by 5% to $335 billion following a 20% plunge in 2016.



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In






Related Categories

Analyst Comments, Dividend Hike, Dividends, Insiders' Blog, Stock Buybacks

Related Entities

Goldman Sachs, Standard & Poor's

Add Your Comment