🏚️ Zillow’s moat cracks

Investors Prioritize Dividends and Buybacks Over Tech Momentum

Investors are done paying for tomorrow’s promises. As AI doubts grow and bond yields climb, the market is shifting toward companies that put cash in shareholders’ pockets today. That shift is pushing cash returns ahead of the growth trades that dominated earlier this year.

Show me the money: The cash return factor (opens in a new tab) measures how much of a company’s net income goes back to shareholders through dividends and buybacks. It has gained 14.2% this year, leading the 16 factors tracked by 22V Research. The AI-linked momentum and price factor has fallen nearly 7% in recent weeks. 22V Research president Dennis Debusschere says investors are putting more value on dependable payouts as confidence in future AI profits weakens.

• The 10-year Treasury yield has climbed to 4.64%, putting more pressure on tech stocks whose valuations depend heavily on future earnings.
• Financial stocks have driven most of the cash return gains, with 65% of names in the sector carrying cash return yields above 10-year Treasury yields.

Caveats in the Boom

The record pace of corporate repurchases deserves some caution. Buyback announcements neared $1T (opens in a new tab) in the first half of 2026, while completed repurchases also ran at a record pace. But Research Affiliates founder Rob Arnott notes that buybacks have historically been negatively correlated with future returns. University of Michigan finance professor Nejat Seyhun is also “mildly pessimistic,” expecting only a “muted response” to the surge in buybacks.

• Tech accounted for 45% of 2026 buyback announcements and financials another 23%, giving the two sectors 68% of total activity.
• Abbott LaboratoriesABT, S&P GlobalSPGI, and 3MMMM stand out for pairing buybacks with net insider buying, a combination historically linked to stronger returns.

Portfolio moves: For broader exposure to the cash return theme, dividend ETFs offer a simple route. Schwab US Dividend Equity ETFSCHD yields 3.13% (opens in a new tab) and requires 10 straight years of dividends for inclusion, while Vanguard High Dividend Yield ETFVYM yields 2.24% and targets higher-yielding stocks. For more targeted bank exposure, the Invesco KBW Bank ETFKBWB tracks an index of companies primarily engaged in US banking, while the Cambria Shareholder Yield ETFSYLD leans heavily toward financial stocks and companies returning cash to shareholders.

Hormuz Crude Flows Climb To Nearly 8M Barrels Despite Ongoing Attacks

Iran keeps striking tankers in the Strait of Hormuz, and Gulf producers keep shipping anyway. Crude flows through the chokepoint have climbed to ~8M (opens in a new tab) barrels a day, still roughly half prewar levels, as producers across the region ramp up loadings despite the risk. For investors bracing for higher inflation, that’s one less reason to worry.

• Satellite imagery showed Saudi Arabia’s highest tanker count in several weeks — a sign the Middle Eastern energy powerhouse is pushing more crude onto the water.
• Meanwhile, Qatar and Kuwait have clawed back to 70% of pre-conflict export levels — deploying shuttles to reach tankers avoiding the Strait’s risk entirely.

The diplomatic dividend: As exports recover, Iran and Oman are advancing talks — with coordinated mine-clearing laying groundwork for a “permanent navigation corridor.” That easing of tension is already showing up in oil prices, with Brent on pace for its biggest weekly drop (opens in a new tab) since late June. The relief spread to equities too, as Tuesday’s stock gains (opens in a new tab) and falling yields reflect cooling inflation fears. Investors are now watching whether that goodwill can survive contact with the broader US-Iran war talks.