Guess what? Earnings season in the US went fine. Surprised? No? Me neither.

I don’t know why anybody bothers sometimes. This is just a game. And it’s rigged. Not in an illegal or overtly nefarious way, just in that kind of way where the outcome is in most cases controllable by the people with a vested interest in a good result: Management teams and company analysts on Wall Street. So, of course companies tend to “beat” estimates.

With around 80% of S&P market cap reporting, 57% of companies beat on the bottom line by more than one standard deviation, according to Goldman. That’s consistent with the previous two quarters and easily better than the long-run average, which is a little less than half.

Aggregate earnings look like they’re going to grow around 7% YoY for Q4, more than double the paltry 3% consensus expected ahead of reporting season.

Drilling down a bit, Goldman’s David Kostin noted that Q4 “highlighted a divergence between returning cash to shareholders and capex spending.”

As the figure below shows, buybacks grew for the first time in more than a year.

Capex, on the other hand, was flat, a far cry from the double-digit growth seen as recently as two quarters ago. (R&D growth was stable, as it usually is.)

In light of Meta’s first-ever dividend and the extent to which the announcement helped fuel the single-largest one-day value creation event in US stock market history, Kostin spend some time talking about dividends. Goldman lifted its S&P 500 dividend per share growth projection for this year to 6% from 4%, citing the acceleration in earnings growth in the back-half of 2024. Kostin sees upside risk to the bank’s index EPS forecast if the US economy continues to outperform expectations.

As to Meta, Kostin noted the Mark Zuckerberg’s dividend will up the index’s DPS by a little less than 1%. “If other large firms were to initiate dividends, it would have a meaningful impact on aggregate DPS,” he added.

The table above is useful, I think. I shows the 20 biggest companies not paying a dividend and what the impact would be if they did under certain assumptions.

“GOOGL and AMZN are the two largest stocks that currently do not pay a dividend but that have fundamentals that historically implied higher odds of initiating a dividend relative to peers,” Kostin went on, adding that if those two companies initiated dividends at a 10% payout ratio, “it could lift 2024 S&P 500 DPS by up to $1.32,” or around 1.8%.