Here's how America's biggest companies are spending their Trump tax cuts. (It's not on new jobs)

https://www.msn.com/en-us/money/companies/heres-how-americas-biggest-companies-are-spending-their-trump-tax-cuts-its-not-on-new-jobs/ar-AAxqhvx?ocid=spartandhp

Alix Langone
May 18, 2018

We’re starting to learn what America’s biggest companies are doing with the huge windfalls from President Donald Trump’s tax cuts. And the answer is great for investors – but not so great for workers.

That’s because many companies are returning huge portions of their billions in tax savings to shareholders in the form of share buybacks and dividend increases — not necessarily new hiring and investment.

Companies are on track to plow a record $1 trillion intoboosting dividends and buying back their own stock this year, says Howard Silverblatt, senior index analyst S&P Dow Jones Indices.

Buybacks are a strategy to boost stock prices – by reducing the number of shares outstanding, which artificially increases a company’s earning per share. But they do little to improve the economy.

Companies in the S&P 500 have also increased dividend payments to shareholders 182 times so far this year, giving investors greater incentive to buy and hold their shares, according to Silverblatt.

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The record-breaking buybacks are especially great news for executives at the companies whose compensation is tied to the stock price because it makes the stock more valuable. Apple stock jumped following the buyback announcement on May 1 and is up more than 11% so far this month.

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a survey by Morgan Stanley predicted that workers would get 13% of the tax windfall – compared to 43% that was expected to go to investors in the form of stock buybacks and dividend increases.

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None of this behavior is a surprise for analysts, said Patcher, the Wedbush analyst. Companies like Apple have already been enjoying the fruits of the rising economic tide and have already made most of the investments that make sense to them, he said. This means they don’t need to put any of their newly earned cash toward new jobs and major projects, especially now that they’re even more profitable than before.

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