Last year was the fifth consecutive one in which U.S. companies allocated more capital to share repurchases than dividends. There are some reasons for that. Buybacks are more flexible than dividends. Additionally, growth companies are apt to be fond of repurchases while being stand-offish regarding dividends, broadly speaking.
Thanks to the WisdomTree U.S. Value Fund (WTV), those two forms of shareholder rewards don’t have to be an either-or proposition. WTV paves the way for investors to have both buyback and dividend cake because the fund focuses on shareholder yield – a concept that includes buybacks and payouts. That is to say WTV is relevant at a time when buybacks are soaring.
“About a trillion dollars this year (2025) in buybacks and about $750 billion in dividend payments,” says Morningstar’s Dan Lefkovitz. “And it’s happening for a lot of reasons. You know, there are tax advantages, of course, to the share repurchase. Dividends are taxed if you’re holding them in a taxable account. Whereas if a company repurchases its shares, as long as you don’t sell those shares, if you’re a holder, your fractional ownership of the company increases.”
WTV Has Some Dividend Growth Potency, Too
The $2.18 billion WTV throttled the S&P 500 Value Index over the past three year, returning 75.3% while that gauge rose 57.7%. That confirms the WIsdomTree does indeed refresh the value investing proposition. WTV’s finer points don’t stop there.
“There’s an old expression that buybacks are like dating, dividends are like marriage. And I think that that is apt,” adds Lefkovitz. “The dividend commitment is really considered sacrosanct by many in the US market, especially if you commit to a quarterly payout to shareholders, the market expects that. And if you withdraw it or you reduce it, the market punishes you. So buybacks can be more opportunistic when the company has cash on hand or really preferably when the shares are undervalued.”
To be sure, dividends aren’t dead. Companies are merely allocating more to repurchases. Regarding some corporations’ ongoing affinity for dividends, WTV is relevant because it has quality tendencies as well as ample exposure to sectors known for payout growth.
For example, the ETF allocates more than 23% of its weight to financial services stocks. That’s a sector where dividend growth has been on the mend over the past several years. A combined weight of roughly 23% to industrial and consumer staples stocks confirms WTV’s leverage to dependable dividend growth sectors.
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