Forum Home Page [see Broadridge note below]

 The Shareholder ForumTM`

Fair Investor Access

This public program was initiated in collaboration with The Conference Board Task Force on Corporate/Investor Engagement and with Thomson Reuters support of communication technologies. The Forum is providing continuing reports of the issues that concern this program's participants, as summarized  in the January 5, 2015 Forum Report of Conclusions.

"Fair Access" Home Page

"Fair Access" Program Reference


Related Projects 2012-2019

For graphed analyses of company and related industry returns, see

Returns on Corporate Capital

See also analyses of

Shareholder Support Rankings


Forum distribution:

Implications of cash payouts and reduced corporate reinvestment for both long term equity and debt investors


For a press release with a link to the full report referenced in the article below, see

For other reports and research concerning investor interests in stock buybacks, see the "Stock Buyback Policy" section of the reference page for a recent case project.


Source: The Wall Street Journal | CFO Journal, March 27, 2015 article


CFO Journal.

March 27, 2015, 7:00 AM ET
Moody’s: Shareholder Dividend Payments Hurting Bond Market

By Vipal Monga

Senior Editor



Bloomberg News

Companies that skimp on spending on factories and equipment could hurt bond market credit quality, argues Moody’s Investors Service.

Credit quality in the investment-grade bond market will weaken in coming years as more companies funnel dividends to shareholders and skimp on investments in factories and equipment, according to a new report by Moody’s Investors Service.

“Investment-grade U.S. companies are increasingly returning cash to shareholders, and have less free cash flow to repay debt today than they did before the recession,” said the report.

Moody’s noted that low interest rates are making it easy for companies to borrow, but also increasing the allure of dividends, because investors are looking for more return on their cash. That’s encouraged companies to increase the amount of their earnings before interest taxes depreciation and amortization (Ebitda) devoted to such payments.

The ratings firm said that the median percentage of Ebitda spent on dividends rose to 11.9% in the third quarter of last year, up from 9.4% in 2013, and the highest since at least 2005, as far back as its analysis went.

Meanwhile, the proportion of Ebitda that investment-grade companies allocated to fund capital spending fell to 27.5% in last year’s third-quarter, down from 29% for full-year 2013, and 31.2% for all of 2005.

That lack of investment in future growth could slow the broader economy, which could create a cycle where companies’ earnings weaken and credit-quality measures, such as debt-to-Ebitda worsen, said Moody’s.

Rising interest rates in coming years could make things even worse, said Bill Wolfe, a Moody’s analyst. He said companies that borrowed money to fund higher dividends would have to refinance their debt at higher rates in coming years, weakening their credit profiles as they paid more in interest.

“That’s the real latent risk that’s built in,” he said.

Companies in the S&P 500 paid a record of about $350 billion in dividends last year, up 12% from the prior year, according to S&P Dow Jones Indices.

Bond investors, however, continue to scoop up debt. As of last Tuesday, investment-grade and junk-rated companies sold a total of $438 billion in new bonds this year, the highest amount for a similar period on record, according to Dealogic.

Moody’s said that such investor demand is “inadvertently rewarding” companies spending more on shareholder returns.



Copyright ©2015 Dow Jones & Company, Inc. All Rights Reserved.


This Forum program was open, free of charge, to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. As stated in the posted Conditions of Participation, the purpose of this public Forum's program was to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant was expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

This Forum program was initiated in 2012 in collaboration with The Conference Board and with Thomson Reuters support of communication technologies to address issues and objectives defined by participants in the 2010 "E-Meetings" program relevant to broad public interests in marketplace practices. The website is being maintained to provide continuing reports of the issues addressed in the program, as summarized in the January 5, 2015 Forum Report of Conclusions.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.