Tech Stock Buyback Leads to Market Value No.1
A-share speculation on high dividend stocks has seen almost all high dividend stocks now breaking below their trend lines. The six most representative major banks have essentially all broken below the...
A-share speculation on high dividend stocks has seen almost all high dividend stocks now breaking below their trend lines. The six most representative major banks have essentially all broken below their half-year lines, with Bank of Communications on the verge of breaking the annual line, and Postal Savings Bank of China having already broken below it. Others such as coal, electric power, home appliances, and construction sectors are also showing a downward trend. China State Construction Engineering Corporation's highest price this year was 5.96 yuan, and yesterday's closing price was 4.95 yuan, with a price-to-earnings (P/E) ratio of only 3.5 times and a dividend yield of 5.4%, with the stock price showing a clear downward trend.
The seven major technology stocks in the U.S. market have now become the "three giants," namely Apple, Microsoft, and Nvidia. However, you will be surprised when you see the dividend yields of these giants. Apple's stock price is $226.47, with a per-share dividend of only $0.98, a dividend yield of 0.43%, and a P/E ratio of 33.7 times; Microsoft's market value is $3.2 trillion, with a stock price of $433.51, a dividend of $3, a dividend yield of 0.68%, and a P/E ratio of 36.5 times; Nvidia's market value is $2.9 trillion, with a stock price of $116.26, a P/E ratio of 53.8 times. The dividend is $0.13, and the dividend yield is 0.11%.
Nvidia's semi-annual report shows a profit of $31.4 billion, but it has launched a $50 billion buyback. This means that the return to shareholders from U.S. technology stocks is mainly reflected in the buyback and cancellation of shares, rather than a simple dividend yield, because such a low dividend yield cannot support such high stock prices.
Apple's market value is $3.4 trillion, with the total share capital decreasing from 264 billion shares in 2012 to 153 billion shares in 2023. Apple started a buyback plan in 2012, and by 2023, Apple's total share capital has decreased by 40%, while the stock price has continued to reach new highs, becoming the stock with the highest market value in the U.S. market. This is the charm of buyback and share cancellation. If it were just a simple dividend distribution, Apple would definitely not become the stock with the highest market value in the U.S. market.
Why is the buyback and cancellation of shares in U.S. stocks so popular in the stock market? The most important thing for the stock itself is to reduce the floating chips in the market. Because the main major shareholders of U.S. technology stocks are basically well-known investment companies. Because they are truly patient capital. They value the growth potential of high-quality technology stocks, and they are all long-term investments, which are truly patient capital. Buffett's purchase of Apple is the same.
The number of retail investors in U.S. technology stocks is very small, and after the buyback and cancellation of shares, the proportion of retail investors' holdings is even lower. For example, Nvidia's stock split from 1 to 10, the lower stock price is easy to stimulate buying, and the stock price is easy to rise and difficult to fall. This is the investment opportunity brought by the growth potential of technology stocks.
A-share speculation on high dividend stocks, at least for now, does not seem to be of much help to the stock market. From China's special valuation to high dividends, the trend of the Shanghai Composite Index is obviously not satisfactory. Not only has it failed to hold 3000 points, but now even 2700 points are in danger.
Apple, Microsoft, and Nvidia in the U.S. market are basically leading enterprises in their respective industries. However, our high dividend stocks are basically traditional industries, and technological development is the direction of future development. I also hope that A-shares will have more technology stocks in the future, especially those that can represent the future development of technology. As for companies with little technological content, please do not list them again!
Some people may say that A-shares do not have technology stocks like those in the U.S. market. It is true that there are not many high-quality technology companies in A-shares now, but technology is, after all, the direction of future development. The country is also paying attention to technological development, and I hope that A-shares will also have a technology bull market in the future.The above is solely my personal opinion and should not be considered as investment advice. Any actions taken based on this information are at your own risk, and I will not be held responsible for any gains or losses incurred.