Prejudices about dividends die hard. It is made the symbol of shameless capitalism, an opportunistic choice of short-sighted leaders. All this to enrich “the shareholders”, these anonymous and venal people, to the detriment of the employees. The State itself sees share buybacks as an ideal target to tax, as if the practice were reprehensible. “Money is made to circulate and there is nothing worse than immobility in this area, which freezes acquired situations, retort Pascal Quiry and Yann Le Fur, both teachers at HEC. Only the conservatives are against dividends and share repurchases.
The authors of La Lettre Vernimmen, a reference in corporate finance, have done the math: in 2024, the CAC 40 groups returned 98.2 billion euros to their shareholders, mainly in the form of dividends. hard and fast. In the top 5 most “generous” groups: TotalEnergies, LVMH, Stellantis, BNP Paribas and Axa. In total, the sum reaches an unprecedented level. But it would be wrong to be offended. First, because the dividend does not enrich the owner of the shares, since the stock price is adjusted by the amount of the detached coupon. We lose on one side what we gain on the other. The two finance experts also offer the perfect counter-example. They recall that three of the richest men on the planet made their fortune by being shareholders of companies that do not pay dividends: Elon Musk with Tesla, Jeff Bezos with Amazon and Warren Buffett with Berkshire Hathaway.
Above all, the practice is part of sound liquidity management. It makes it possible to reallocate excess capital from large profitable groups towards innovative and growing companies. Do not believe, however, that the CAC 40 leaders lack inspiration: Pascal Quiry and Yann Le Fur measured their level of investments at 116.6 billion last year, an effort up 22% compared to 2023 and even more than 50% compared to 2019, before Covid. Again, record broken.