The S&P 500 has seen a significant rise of over 10% so far this year, largely attributed to investors’ expectations of increasing dividends, which are profits redistributed from companies to their shareholders. Dividend payouts among companies in the S&P 500 surged to a new record in 2023 and are projected to continue growing in 2024, according to data from the CME Group.
The surge in dividends reflects the substantial net profits of the 200 largest publicly traded companies in the United States, which reached $1.25 trillion in 2022, marking a 63% increase from 2018. Remarkably, about 90% of these profits, totaling $1.1 trillion, were directed to shareholders through stock buybacks and dividend payments, according to research conducted by anti-poverty organization Oxfam International.
However, Oxfam’s study also reveals a concerning trend regarding corporate behavior. Despite the substantial profits being funneled to shareholders, only 10 out of the 200 largest companies have publicly expressed support for paying a living wage. Additionally, CEO pay, often augmented by company shares, has surged by nearly a third since 2018, with some companies reporting CEO-to-worker pay ratios exceeding 1,500 to 1.
Critics argue that stock buybacks disproportionately benefit wealthy executives, enabling them to manipulate markets and divert corporate profits away from workers. They advocate for measures to restrict buybacks, asserting that this would free up corporate funds for investment in growth and wage increases.
In contrast, proponents of buybacks argue that they efficiently distribute excess capital and can enhance shareholder value by reducing the number of shares in the market, thus increasing demand for the stock and earnings per share.
Furthermore, Oxfam’s report highlights how the prioritization of buybacks and dividend boosts over employee well-being has exacerbated gender and racial inequality in the workplace. The retail sector, for instance, which is demographically diverse, exhibits significant disparities in executive representation and median salaries.
Amidst these concerns, President Joe Biden has proposed tax reforms targeting the wealthiest Americans, including a 25% tax on individuals with more than $100 million in wealth. Additionally, there are growing concerns about tax avoidance by corporations, with some large companies reportedly paying their executives more than their federal tax obligations.
Overall, the surge in dividends and profits among major corporations underscores the need for greater scrutiny of corporate practices and a reevaluation of priorities to address growing income inequality and ensure fair taxation.
Truth Social owner Trump Media will begin trading Tuesday as the merger closes
Trump Media & Technology Group, owner of Truth Social, announced on Monday that its merger with publicly traded shell company Digital World Acquisition Corp. has closed, paving the way for trading to commence on the stock market on Tuesday.
Former President Donald Trump, who serves as chairman and dominant shareholder of the new entity, stands to benefit substantially from the merger, amounting to a multi-billion dollar windfall. The completion of the merger saw shares of Digital World rise by 21%, with further buying boosting the stock by 33% to approximately $49 by Monday afternoon. Trump’s stake in the company is estimated to be worth around $4 billion at current prices, although lock-up restrictions may prevent him from selling or leveraging the value of his stock for several months.
The newly merged company will trade under the ticker symbol “DJT” on the Nasdaq Stock Market, as announced by both entities.
Devin Nunes, CEO of the combined company, emphasized the mission to “reclaim the Internet from Big Tech censors” in a statement.
However, some experts caution that the market may be overvaluing Trump Media, considering the company’s financial performance. Trump Media reported just $3.4 million in revenue during the first nine months of the previous year, with a net loss of $49 million over the same period.
Furthermore, there are concerns regarding the declining user base of Truth Social, the flagship platform of Trump Media. Data from Similarweb indicates that the number of monthly active users on Truth Social’s iOS and Android platforms in the US has decreased by 39% year-over-year.
Despite the enthusiasm surrounding the merger and the launch of Truth Social, these challenges underscore the importance of addressing fundamental business metrics and user engagement to ensure sustained success in the competitive social media landscape.
Boeing CEO Dave Calhoun to step down in wake of ongoing safety problems
Boeing CEO Dave Calhoun announced on Monday his intention to depart the company by the end of the year, signaling a significant shakeup in the company’s leadership. Additionally, Boeing’s chairman and the head of the commercial airplane unit are also leaving, as reported by my colleague Chris Isidore.
In an interview on CNBC, Calhoun stated that the decision to leave was entirely his own choice.
However, Calhoun has faced mounting criticism regarding Boeing’s management in recent years, particularly in light of numerous safety and quality issues. Boeing has encountered a series of challenges spanning over five years, including two fatal crashes of the 737 Max in 2018 and 2019, resulting in the tragic loss of 346 lives. More recently, an incident involving a door plug blowing out of the side of an Alaska Airlines 737 Max in January has raised further concerns. These issues have led to multiple groundings for safety reasons and cumulative losses exceeding $31 billion.
Calhoun’s departure comes amidst ongoing scrutiny of Boeing’s leadership and operations, with stakeholders seeking accountability and solutions to address the company’s persistent challenges.