Deutsche Bank analyst Binky Chadha sees the current environment in the market as being ideal for large increases in payouts -- especially buybacks -- as companies are seeing high levels of cash flows. The report from Deutsche Bank points out that analysts are expecting dividends at financial firms to increase by $30 billion or 100 percent once definitive capital requirements are set.
“Operating cash flow at over $1 trillion continues to run strong and is already at its previous peak but capex and payouts were cut 25 percent and 53 percent, respectively, from 2008 peak levels. As a result, corporates must increase spending by $250 billion to $300 billion annually on capex & payouts just to keep their cash mountains from growing further. The current spending pattern seems to be tracking the 2003-2004 period in which firms also significantly ramped up payouts and capex.”
Source: StreetInsider.com
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