US shares have rarely been high on an income investor’s wishlist, with average dividend yields for the S&P 500 Index meaningfully trailing the ASX 200 Index and other markets for decades. However, US companies are no less cash generative. Instead, share buybacks have been the primary mechanism for ‘returning’ cash to shareholders. When buybacks are included, US shares have consistently ‘yielded’ higher than Australian shares.
With the Biden Administration’s proposed changes to capital gains taxation underfoot, this may spark a rethink amongst US corporates regarding dividend policy.