CEOs across the nation are celebrating the biggest tax overhaul in history with many providing key details on how they plan to use the savings. Two major themes, investing back in the business and returning cash to shareholders, topped the fourth-quarter earnings discussions. As a result, Goldman Sachs (GS) recently raised its S&P 500 dividend estimates and said it expects lower corporate tax rates will contribute to 10% dividend per share growth in 2018. Here are some of the companies moving the needle.
Investing in Growth
3M Co. (MMM).... “coupled with tax reform, we are increasing the top end of our 2018 CapEx expectation $100 million to a range of $1 .5 billion to $1 .8 billion.
Johnson & Johnson (JNJ): “Regarding the more immediate tax reform impact, we think that the wise thing to do is to invest a good portion of that back into R&D.”
Goodyear Tire & Rubber (GT): said its priority is to invest in the business through growing CapEx and restructuring, while the company also plans on returning excess to shareholders .
Microchip Technology (MCHP): acknowledged how the tax reform makes cash that was before, permanently invested offshore “easily moveable,” adding that its priorities are, “investing in M&A ﬁrst, dividend second, and our stock buyback only opportunistically.”
McDonald’s Corp. (MCD) said, “the ﬁrst priority is clearly to invest in the business for growth, and then we’ll consider dividends and share buyback.”
Returning cash to shareholders
Cisco Systems Inc. (CSCO) increased its share repurchase program by $25 billion, which hikes the remaining share repurchase authorization to approximately $31 billion, which they expect to utilize over the next 18 to 24 months.
Proctor & Gamble (PG) increased its ﬁscal 2018 share repurchase outlook to a range of $6 billion to $8 billion, from a range of $4 billion to $7 billion, acknowledging the cash beneﬁt enabled by the Tax Act.
Alphabet Inc.’s (GOOGL) board extended its share repurchase program up to an additional $8.6 billion of Class C capital stock.
ConocoPhillips (COP): increased its quarterly dividend by 7.5% and upsized its planned 2018 share repurchases by over 30% to $2 billion.
eBay Inc.’s (EBAY) board approved a new $6 billion share repurchase authorization.
Visa Inc. (V): raised the quarterly dividend again this quarter to reﬂect the higher earnings potential of Visa post-tax reform, with the board authorizing an additional $7.5 billion share repurchase program.
Many companies also pledged to use some of their savings to offer bonuses and increased benefits to employees. FOX Business has a breakdown at: Tax Reform Windfall.