This text is taken from Courrier de l’économie. Click here to subscribe.
One of our readers, Claude Paquet, wonders what analysis Karl Marx would make of the exponential dividends paid to shareholders, the famous 1%, with regard to the perpetual impoverishment of the middle class.
Karl Marx would surely find something to rejoice in. Since its birth in 1818 and the end of the industrial revolution, equity investment has been greatly democratized.
Retail investors account for, on average, about 20% of trading activity and nearly a quarter of trading on peak days, according to data from firm Citadel Securities cited by Bloomberg TV. ComparativesBanks.ca tells us that, according to 2016 data—the latest available—on stock market investments in the United States, a relatively small share of American families (14%) “are directly invested in individual stocks”, but a majority (52%) have “some level of investment in the market”.
According to data from the Institut de la statistique du Québec, in the third quarter of 2020, the assets entrusted to brokerage firms were invested 47.3% in equities, 27.2% in mutual funds. and segregated funds, 6.2% in exchange-traded funds and 8.5% in bonds. A third of these funds are held in registered plans (RRSP, LIRA, RESP, RRIF, LIF, TFSA). Added to this is investment in labour-sponsored funds. The Fonds de solidarité FTQ claims some 753,000 shareholders and Fondaction, more than 209,000.
Additionally, statistics from the Investment Funds Institute of Canada indicate that at the end of December 2022, total investment fund assets reached $1.809 billion. Of this total, balanced funds (880 billion) and equity funds (649 billion) held a market share of 85%.
Finally, in the Dividend family, preferred shares occupy an important place in many individual portfolios.
For the indirect investment of public funds, the Caisse de dépôt, the Canada Pension Plan, the Quebec Pension Plan, supplemental pension plans, insurers’ annuities, etc. are all major beneficiaries of the dividends paid on their equity investment.
Not to mention their more advantageous tax treatment than that of interest income.
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