Total Shareholder Yield: Indexing Based on Both Dividends and Share Buybacks

Recent decades have witnessed a paradigm shift in the way cash is returned to equity shareholders. Companies have increasingly elected to use cash to buy back their own shares, in place of dividends or in tandem. To address this market shift, the Morningstar US Dividend and Buyback Index is predicated on the total shareholder yield concept. The index provides exposure to U.S. companies that return the most capital to shareholders, whether through dividends, buybacks, or a combination.

In this report, you will learn about:
  • The shift in market dynamics in favor of share buybacks at the expense of dividends
  • The concept of total shareholder yield
  • How selecting companies on the basis of both dividends and buybacks provides a more complete picture of market yield and makes for an attractive investment strategy
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