In the world of investing, shareholders seek the best returns while managing risk. One key metric that has gained traction among savvy investors is shareholder yield— a comprehensive measure that considers dividends, share buybacks and debt reduction. Unlike traditional dividend yield, shareholder yield provides a more holistic view of how a company returns value to investors.
Investors seeking sustainable returns should consider shareholder yield as a key factor in their stock selection. Companies that effectively distribute excess cash through dividends, buybacks and debt reduction often deliver strong financial performance and long-term value. By focusing on firms like Verizon Communications VZ,Suncor Energy SU,Canadian Natural Resources Limited CNQ and VALE VALE, which boast high shareholder yield, investors can identify opportunities that not only provide income but also enhance overall portfolio returns.
Shareholder yield is calculated as the sum of dividend yield, net buyback yield and net debt paydown yield. Dividend yield represents the percentage of a company's share price paid out as dividends. Net buyback yield reflects the rate at which a company repurchases shares, reducing the overall share count. Net debt paydown yield indicates how much of a company's cash flow is dedicated to reducing debt, thereby strengthening its balance sheet. By considering these three components, shareholder yield offers a fuller picture of how a company allocates capital to benefit investors.
Investors looking to incorporate shareholder yield into their investment strategies should analyze how consistently a company returns value to shareholders. A balanced approach that includes dividends, buybacks and debt reduction can indicate financial health and a commitment to long-term growth. Companies that aggressively buy back shares while maintaining dividend payouts and reducing debt often create sustainable value for investors.
Additionally, industries with strong cash flow generation, such as technology, financial services and consumer goods, often exhibit high shareholder yields.
Another crucial metric to consider when evaluating shareholder yield is the payout ratio. The payout ratio represents the proportion of a company's earnings paid out as dividends to shareholders. A lower payout ratio indicates that a company retains more earnings for reinvestment and future growth, whereas a high payout ratio suggests that a significant portion of earnings is distributed as dividends. A sustainable payout ratio, typically below 60%, is often preferred, as it balances rewarding shareholders with maintaining financial flexibility.
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Verizon Communications is a leading telecommunications company that offers an appealing shareholder yield through its high dividend payments and strategic debt reduction. With a dividend yield of 6.21%, VZ provides investors with a steady income stream. The company increased its dividend payout five times in the last five years, reflecting an annualized dividend growth rate of 2%. The payout ratio of 59% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that VZ is keeping funds for better investment opportunities. The company will pay its next dividend of 68 cents per share in May.
Verizon Communications also focuses on reducing its leverage, which ensures long-term financial stability. VZ reduced its long-term debt from $123.1 billion in 2020 to $121.4 billion in 2024. VZ has a authorized share buyback program to repurchase up to 100 million shares of its common stock, as of December 2024.
VZ currently carries a Zacks Rank #3 (Hold) and a Zacks Style Score of ‘B’, implying solid prospects for the stock as well. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Suncor Energy is a dividend powerhouse, offering a generous yield of approximately 4.3%, making it attractive for income-seeking investors. The company raised its dividend payout 13 times in the last five years, reflecting an annualized dividend growth rate of 22.3%. The payout ratio of 41% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that SU is keeping funds for better investment opportunities.
SU has also been actively restructuring its operations to improve profitability and reduce debt. With a long history of rewarding shareholders, Suncor’s strong capital allocation strategy makes it a standout option for those looking for sustainable income and growth potential. SU reduced its long-term debt from $10.3 billion in 2020 to $6.82 billion in 2024. In 2024, Suncor repurchased approximately 55.6 million of its common shares. The existing repurchase authorization permits the company to purchase up to 10% of public float.
SU currently carries a Zacks Rank #2 (Buy) and a Zacks Style Score of ‘A’, implying solid prospects for the stock.
Canadian Natural Resources Limited, Canada’s leading independent energy company, boasts an impressive shareholder yield due to its robust dividend policy and stock repurchase initiatives. The company offers a dividend yield of around 5.41%. CNQ increased its dividend payout 18 times in the last five years, reflecting an annualized dividend growth rate of 25.6%. The payout ratio of 63% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that CNQ is keeping funds for better investment opportunities. The company has approved a dividend payment alongside its full-year 2024 results of 41 cents, which will be paid out next month.
Additionally, CNQ maintains a solid balance sheet with manageable debt levels, ensuring financial stability. The firm reduced its long-term debt from $15.01 billion in 2020 to $6.17 billion as of September 2024. Compared to global energy peers, CNQ’s commitment to shareholder-friendly policies makes it a better choice for investors seeking strong total returns through dividends and capital appreciation.
CNQ currently carries a Zacks Rank #2 and a Zacks Style Score of ‘B, implying solid prospects for the stock.
VALE stands out as a strong candidate for high shareholder yield due to its attractive dividend payments, consistent share buybacks and effective debt management. The company offers a competitive dividend yield of around 7.41%, coupled with periodic stock repurchases that enhance shareholder value. The company increased its dividend payout six times in the last five years, reflecting an annualized dividend growth rate of 10.5%. The payout ratio of 58% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that VALE is keeping funds for better investment opportunities. The company is likely to pay its next dividend of 37 cents per share in June.
Since 2021, VALE has repurchased about 20% of its outstanding shares, and it expects to continue common share repurchases on a regular basis going forward. The company approved a new share buyback program in February, authorizing the acquisition of up to 120 million common shares within next 18 months..
Additionally, VALE has been reducing its debt levels and strengthening its financial position. VALE reduced its long-term debt from $17.3 billion in 2020 to $15.59 billion as of September 2024. Compared to other investment management firms, VALE's shareholder yield remains impressive, making it a compelling choice for investors seeking a combination of income and capital appreciation while benefiting from disciplined capital allocation.
VALE currently carries a Zacks Rank of 3 and a Zacks Style Score of ‘B’. Although the Zacks Rank implies hold, the cheap valuation and attractive growth prospects bode well.
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Verizon Communications Inc. (VZ) : Free Stock Analysis Report
VALE S.A. (VALE) : Free Stock Analysis Report
Suncor Energy Inc. (SU) : Free Stock Analysis Report
Canadian Natural Resources Limited (CNQ) : Free Stock Analysis Report
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