Dividends vs. Buybacks: Companies Best Use of Cash

David Bianco, chief equity strategist at Deutsche Bank, discusses the theme of cash usage in companies, focusing on dividends and share buybacks. He highlights the challenges in finding investment opportunities and the impact of the US tax code on cash accumulation offshore. Bianco predicts earnings growth and a stable market outlook, with a focus on dividend payout trends and historical changes. He concludes with a positive view for 2015, despite potential volatility.

What is a key theme discussed by David Bianco regarding company cash usage?

• Increasing employee salaries

• Investing in real estate

• Dividends and share buybacks

• Reducing product prices

How do companies typically use their onshore cash flow?

• For dividends and share buybacks

• For international expansion

• For reducing debt

• For research and development

What is the expected contribution of share buybacks to earnings growth next year?

• 10%

• 5%

• 8%

• 2%

What historical trend is noted about dividend payouts in the early 20th century?

• They were non-existent

• They were primarily in the technology sector

• They were about 2/3 of index earnings

• They were less than 10%

Which sectors are expected to lead the increase in dividend payout ratios?

• Automotive and manufacturing

• Banks and technology

• Energy and utilities

• Healthcare and retail