Maximizing Returns: A Look at Dividend-Paying Stocks and Buybacks
For investors aiming for both income and long-term growth, dividend-paying stocks combined with stock buyback programs can be a wise investment choice. Dividends provide regular income, while buybacks can increase shareholder value by reducing outstanding shares and boosting earnings per share (EPS).
Dividends, which are portions of a company’s profits given to shareholders typically on a quarterly basis, create a reliable income stream attractive to income-focused investors. Conversely, stock buybacks occur when companies utilize their cash reserves to repurchase shares in the open market. This approach decreases the number of outstanding shares, subsequently enhancing existing shareholders’ ownership stakes and possibly increasing stock prices.
Citigroup: A Financial Leader’s Assurance to Investors
Citigroup (NYSE: C) stands as a global powerhouse in financial services, offering a variety of products to consumers, corporations, and institutions. Its broad reach supports a history of rewarding shareholders in diverse ways.
The Citigroup Board recently declared a quarterly dividend of $0.56 per share on common stock, payable on February 28, 2025, to shareholders of record as of February 3, 2025. The company’s current dividend yield is approximately 2.85%.
Further emphasizing its commitment to shareholder benefits, Citigroup announced a $20 billion common stock repurchase program set to start in the first quarter of 2025. This buyback plan followed a robust fourth-quarter earnings report, which reinforced positive investor sentiment. Citigroup reported a net income of $2.9 billion in the fourth quarter of 2024, or $1.34 per diluted share, up from the previous year, with revenues reaching $19.6 billion—a 12% increase compared to the same quarter in 2023. Over the full year of 2024, net income amounted to $12.7 billion on total revenues of $81.1 billion, reflecting a nearly 40% increase compared to 2023. These figures showcase strong financial performance and a dedication to enhancing shareholder value.
ExxonMobil’s Vision for 2030: A Roadmap for Sustainable Value
ExxonMobil (NYSE: XOM) is heavily involved in the exploration, production, refining, and marketing of oil and natural gas. With a current dividend yield of 3.57%, ExxonMobil recently raised its quarterly dividend by 4% to $0.99 per share, marking 42 consecutive years of dividend increases—an indication of the company’s commitment to rewarding its shareholders.
Moreover, ExxonMobil’s dedication to investor value extends beyond dividends. The company plans an impressive $20 billion in share buybacks for both 2025 and 2026, reflecting a strong capital return strategy that complements its overall investor engagement.
In addition, ExxonMobil is making significant investments in Guyana aimed at amplifying production capabilities, developing LNG projects, and expanding advanced recycling efforts. A lithium carbonate offtake agreement with LG Chem also signals future growth potential. These initiatives are projected to enhance earnings by $20 billion and cash flow by $30 billion by 2030.
ExxonMobil’s Q3 2024 earnings report highlighted significant strides, with earnings reaching $8.6 billion, or $1.92 per share. The company achieved a record liquids production rate of 3.2 million barrels per day, underscoring its operational efficiency and growth plan. Although 2024 year-to-date earnings of $26.1 billion fell short of $28.4 billion from the previous year due to lower refining margins and natural gas prices, the company continues to benefit from growth in Guyana and the Permian area, which has helped mitigate the impact of decreased prices.
Bank of America (NYSE: BAC) offers a wide range of banking, investment, and financial services to a diverse clientele. The company has recently raised its dividend yield to 2.24%, showcasing its focus on providing returns to shareholders. Bank of America also approved a substantial $25 billion share repurchase program in August 2024, signaling a strong commitment to returning value to its investors.
The fourth-quarter earnings report for 2024 reflected a notable increase in profitability, with net income climbing to $6.7 billion and earnings per share at $0.82. Furthermore, full-year 2024 results revealed net income exceeding $27.1 billion on revenues surpassing $100 billion, indicating a healthy 3% growth in revenue and nearly 40% growth in net income year-over-year. During Q4 2024, Bank of America returned a remarkable $5.5 billion to shareholders, comprised of $2 billion in dividends and $3.5 billion in buybacks, reinforcing its dedication to shareholder value.
The bank is also focused on investing in digital capabilities. By enhancing its technology, Bank of America aims to improve customer service and expand its digital reach, thus enhancing operational efficiency and customer convenience. The combination of strong financial results, a solid capital return strategy, and a focus on innovation establishes Bank of America as a formidable player in the financial sector committed to delivering substantial returns to its shareholders.
A Winning Approach: The Synergy of Dividends and Buybacks
These three companies provide investors with an appealing mix of dividend income and share buybacks, demonstrating their commitment to enhancing shareholder value. Regular dividends cater to those seeking income, while buybacks can boost earnings per share and elevate stock prices. Together, these strategies create a powerful proposition for investors interested in both earning income and pursuing growth potential. Each company’s strategic initiatives, strong financial performance, and commitment to returning capital to shareholders point to a positive outlook for long-term investors.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.