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Canadian Stocks Spend A Record $170 Billion On Buybacks And Dividends

Publicly traded companies listed on the Toronto Stock Exchange (TSX) have spent a record $170 billion on share buybacks and dividend payouts in the last year, according to a new report by CIBC Capital Markets (CM).

The report says that dividends payments and stock buybacks among Canadian companies surpassed those of companies listed on the rival S&P 500 index in the U.S.

CIBC says that the Canadian payout yield has reached 5.5%, a record level that is greater than the 5% average yield offered by companies listed on the S&P 500 index.

The federal government’s incoming 2% buyback tax that takes effect in January 2024 has accelerated stock repurchases among Canadian companies, says CIBC.

At the same time, record earnings and strong cash flows among oil and natural gas companies listed on the TSX has also led to dividend increases and greater stock buybacks this year.

CIBC says lower commodity prices, rising capital reserves among banks, and the buyback tax will cause payouts in Canada to decline to about $140 billion, or a payout yield of 4.4%, in 2024.

CIBC’s stock has declined 12% over the last year to trade at $55.25 per share.