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Business trends

Global shareholder returns nearly double since financial crisis

Record-high earnings drive $2.38 trillion in investor rewards in fiscal 2018

Shareholders are making out as companies redirect their cash on hand away from capital investments and toward dividends and share buybacks.   © Reuters

TOKYO -- Companies around the world are returning more to shareholders, according to QUICK FactSet research.

The combined total of dividend payouts and share buybacks by about 15,000 companies in 100 countries is expected to reach $2.38 trillion in fiscal 2018, nearly double the level immediately before the global financial crisis.

As digital technology increasingly takes over from manufacturing as the driver of industry, global shareholder returns have grown to rival capital expenditures.

This shows a long-term shift in the way businesses allocate earnings. The research, which looked at company data sets available on a continuous basis, indicates that money is being spent inefficiently, partly due to the effects of central banks' monetary easing policies.

Companies' total cash on hand for the first time has exceeded $5 trillion.

The global economy recently began showing signs of slowing, but corporate earnings in Japan, the U.S. and Europe remain at record highs. Companies based in these economies are actively using money earned to reward shareholders. Total shareholder returns from companies in Japan, the U.S. and Europe for fiscal 2018 are expected to increase nearly 20% from a year ago.

According to the World Bank, shareholder returns in fiscal 2017 were nearly 3% of the globe's $80 trillion in gross domestic product, up from a little less than 2% a decade ago.

By comparison, worldwide capital expenditures reached $2.26 trillion in fiscal 2017, down 6% from the most recent peak, in fiscal 2014.

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