Seeking Alpha

Nygren: Buyback stocks cheaper than dividend payers

  • Investors have been overpaying for dividend stocks while undervaluing those firms buying back shares, Oakmark's Bill Nygren tells the crew at Fast Money. Investors should treat both the same, but the stocks of repurchasers aren't as expensive, he says.
  • Previous: Buyback ETFs outpacing market and dividend funds.
  • Among his favorite picks are Bank of America (BAC) and JPMorgan (JPM). "What we see here is really low P/Es relative to the market and relative to their own history ... These companies sell at about 8x the level that we think they'll earn after the legacy mortgage costs stop going through the income statement."
  • Other top picks are Apache (APA) - selling assets for close to full value and buying back shares - Haliburton (HAL) - which has tendered to repurchase 4-5% of its shares - and DirecTV (DTV) - also buying back stock.
  • Buyback ETFs: PKW, TTFS.
  • Dividend ETFs: FDL, FVD, MDIV, QDF, QDYN, QDEF, DIV, CVY, DVY, HDV, IYLD, PEY, PFM, SCHD, SDY, SDYL, DVYL, VYM, DHS, DTD, SYLD, KBWD, SPHD, DLN, DON, HILO.
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Comments (8)
  • spinrbait
    , contributor
    Comments (389) | Send Message
     
    jpm is one of my favorite companies. however as far as investing, i am afraid the gov't is planning on destroying the company.
    21 Aug 2013, 09:02 AM Reply Like
  • 153972
    , contributor
    Comments (759) | Send Message
     
    Could you be more specific? I'd be interested in your reasons why you see the US government planning on destroying the company.

     

    I see it more as JPM probable misfeasance at the senior executive levels:

     

    Chinagate

     

    Manipulation of utility markets

     

    MBS settlements

     

    London Whale

     

    ETC
    21 Aug 2013, 06:24 PM Reply Like
  • StockGaming.com
    , contributor
    Comments (67) | Send Message
     
    What about Citigroup? Aren't they buying back shares?
    21 Aug 2013, 09:06 AM Reply Like
  • marketnews09
    , contributor
    Comments (97) | Send Message
     
    I would like to know what you think about, bkh, Black Hills and AEP, American Electric Power.
    Thanks,
    HS
    21 Aug 2013, 10:49 AM Reply Like
  • what do I know
    , contributor
    Comments (1049) | Send Message
     
    Are you not forgetting about companies that do not pay dividends, do not buy back shares, like, say, CRM, NFLX, Tesla, AMZN, GOOG, FB, etc. Are these shares there just to disprove any financial theory. Why no new thesis coming around to accommodate these "anaomalies" or they would be carried along as stocks that do not follow any "rules or reasons". Next time you publish any please remember "nothing is that simple" as they seem. ( It is opposite to anything that glitters ..).
    21 Aug 2013, 10:55 AM Reply Like
  • beaker46
    , contributor
    Comments (9) | Send Message
     
    You need to check your facts. SYLD is a combination of dividends, buy backs, and internal reinvestments as it's theory, and has outperformed PKW since SLYD's inception. Dave
    21 Aug 2013, 04:09 PM Reply Like
  • Jon Peter
    , contributor
    Comments (802) | Send Message
     
    Also, Mebane Faber is one of its managers which I think is a plus.
    Its has very good volume since inception, appears to have caught on early.
    22 Aug 2013, 07:10 AM Reply Like
  • 153972
    , contributor
    Comments (759) | Send Message
     
    I'll take dividends over buybacks. Buybacks can be done to put money in the executives pockets as opposed to the investors pocket.
    21 Aug 2013, 06:26 PM Reply Like
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