Why Some Fund Managers Prefer Dividends Over Share Buybacks [Video]

Now that the full extent of the market rout in 2022 is coming into view, some investors are reassessing their strategies and, in some cases, starting to consider dividend stocks and dividend-focused funds.

Record dividend payments in 2022

It’s no secret that 2022 was a bleak year for stock returns. However, companies in the S&P 500 paid out a record $565 billion in dividends throughout the year. Data from S&P Dow Jones Indices reveals that dividend payouts from the index grew an impressive 10% year over year.

In a press release in January, analyst Howard Silverblatt of S&P Dow Jones Indices said 2023 should bring another record year for dividend payouts—even in the event of a “full recession.” He expects rising interest rates and bond yields to “exert upward pressure on dividend payouts,” adding that competition for income will increase.

Of course, dividends aren’t the only way company managements incentivize shareholders to own their shares. Buybacks are another popular …