In the world of investing, shareholders seek the best returns while managing risk. One key metric that has gained traction among savvy investors is shareholder yield — a comprehensive measure that considers dividends, share buybacks and debt reduction. Unlike traditional dividend yield, shareholder yield provides a more holistic view of how a company returns value to its investors.

Those seeking sustainable returns should consider shareholder yield as a key factor in their stock selection. Companies that effectively distribute excess cash through dividends, buybacks and debt reduction often deliver strong financial performance and long-term value. By focusing on firms like BP BP, BanColombia CIB,SK Telecom Co. SKM and RITHM CAP CP RITM, which boast high shareholder yield, investors can identify opportunities that not only provide income but also enhance overall portfolio returns.

Shareholder yield is calculated as the sum of dividend yield, net buyback yield and net debt paydown yield. Dividend yield represents the percentage of a company's share price paid out as dividends. Net buyback yield reflects the rate at which a company repurchases shares, reducing the overall share count. Net debt paydown yield indicates how much of a company's cash flow is dedicated to reducing debt, thereby strengthening its balance sheet. By considering these three components, shareholder yield provides a more comprehensive view of how a company allocates capital to benefit its investors.

Investors seeking to incorporate shareholder yield in their investment strategies should examine a company's consistency in returning value to shareholders. A balanced approach that includes dividends, buybacks and debt reduction can indicate financial health and a commitment to long-term growth. Companies that aggressively buy back shares while maintaining dividend payouts and reducing debt often create sustainable value for investors. Additionally, industries (with strong cash flow generation), such as technology, financial services and consumer goods, often exhibit high shareholder yields.

Another crucial metric to consider when evaluating shareholder yield is the payout ratio, which represents the proportion of a company's earnings paid out as dividends to shareholders. A lower payout ratio indicates that a company retains more earnings for reinvestment and future growth, whereas a high payout ratio suggests that a significant portion of earnings is distributed as dividends. A sustainable payout ratio, typically below 60%, is often preferred, as it strikes a balance between rewarding shareholders and maintaining financial flexibility.

Story Continues

Ready to uncover more transformative thematic investment ideas? Explore 30 cutting-edge investment themes with Zacks Thematic Screens and discover your next big opportunity.

4 Top Stocks With Impressive Shareholder Yield

BP is a leading oil and gas company that offers an appealing shareholder yield through its high dividend payments and strategic debt reduction. With a dividend yield of 6.69%, BP provides investors with a steady income stream. The company increased its dividend payout six times in the last five years, reflecting an annualized dividend growth rate of 7%. The payout ratio of 68% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that BP is keeping funds for better investment opportunities. The company will pay its next dividend of 48 cents per share in June.

BP also focuses on reducing its leverage, which ensures long-term financial stability. BP reduced its long-term debt from $72.66 billion in 2020 to $58.65 billion in 2024. BP has repurchased shares worth $7.13 billion and $7.92 billion in 2024 and 2023, respectively.

BP currently has a Zacks Rank #3 (Hold) and a Zacks Style Score of ‘A’, implying solid prospects for the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BanColombia is a dividend powerhouse, offering a generous yield of approximately 15.9%, making it attractive for income-seeking investors. The company has raised its dividend payout eight times in the past five years, reflecting an annualized dividend growth rate of 65.4%. The payout ratio of 51% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that CIB is keeping funds for better investment opportunities.

CIB has also been actively restructuring its operations to improve profitability and reduce debt. With a long history of rewarding shareholders, BanColombia’s strong capital allocation strategy makes it a standout option for those looking for sustainable income and growth potential. CIB reduced its long-term debt from $9.76 billion in 2020 to $5.75 billion in 2024. BanColombia plans to propose a $300 million buyback program at the first Grupo Cibest shareholder meeting in June.

CIB currently carries a Zacks Rank #3 and a Zacks Style Score of ‘A’, implying solid prospects for the stock.

SK Telecom, a leading digital cellular service provider, boasts an impressive shareholder yield due to its robust dividend policy and stock repurchase initiatives. The company offers a dividend yield of around 5.97%. SKM has increased its dividend payout seven times in the past five years, reflecting an annualized dividend growth rate of 15.6%. The payout ratio of 42% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that SKM is keeping funds for better investment opportunities.

Additionally, it maintains a solid balance sheet with manageable debt levels, ensuring financial stability. The firm reduced its long-term debt from $8.21 billion in 2020 to $6.39 billion as of December 2024. Compared to global telecom peers, SKM’s commitment to shareholder-friendly policies makes it a better choice for investors seeking strong total returns through dividends and capital appreciation. In 2024, SKM repurchased 317,000 common shares under the 2023 Share Repurchase Agreement.

SKM currently carries a Zacks Rank #2 (Buy) and a Zacks Style Score of ‘A’, implying solid prospects for the stock.

RITHM CAP CP stands out as a strong candidate for high shareholder yield due to its attractive dividend payments, consistent share buybacks and effective debt management. The company offers a competitive dividend yield of around 8.95%. RITM increased its dividend payout four times in the last five years, reflecting an annualized dividend growth rate of 18.7%. The payout ratio of 47% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that RITM is keeping funds for better investment opportunities. The company is likely to pay its next dividend of 37 cents per share in June.

Additionally, RITM has been reducing its debt levels and strengthening its financial position. It reduced its long-term debt from $27.19 billion in 2020 to $18.6 billion as of December 2024. Compared to other investment management firms, RITM’s shareholder yield remains impressive, making it a compelling choice for investors seeking a combination of income and capital appreciation while benefiting from disciplined capital allocation.

RITM currently carries a Zacks Rank of 2 and a Zacks Style Score of ‘B’. Although the Zacks Rank implies hold, the cheap valuation and attractive growth prospects bode well.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BP p.l.c. (BP):Free Stock Analysis Report

SK Telecom Co., Ltd. (SKM):Free Stock Analysis Report

BanColombia S.A. (CIB):Free Stock Analysis Report

Rithm Capital Corp. (RITM):Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

View Comments