Dividends and Share Buybacks Are on the Rise in Japan ...
There are indications that Japanese companies are placing a greater emphasis on investor returns and breaking with a tradition of hoarding cash.
Returns on equity for Japanese businesses historically have lagged companies in other developed markets. In an effort to change that, Prime Minister Shinzo Abe’s administration is pushing for improvements in corporate governance as part of its economic recovery plan. A new corporate governance code encourages companies to focus on profitability, capital efficiency and the appointment of outside directors.
Japanese companies appear to have received the message loud and clear. Some have begun to implement new policies aimed at improving returns on equity. What’s more, dividend payments and share buybacks have been rising in recent years, a trend that the market expects to gain momentum in the coming quarters.
As you can see in the chart above, dividend growth among Japanese companies has outpaced growth in other markets.
Select companies in a wide variety of sectors and industries have been growing dividend payments at a faster rate than the broader Japanese market. Among these are KDDI, an integrated telecom company, electronic components maker Murata Manufacturing and Toyota.
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