With a sluggish economy, companies are hesitant to reinvest much cash, so it's been building up by the truckloads on corporate balance sheets. Since the returns on cash are near zero, it's certainly not creating shareholder value - and that's led companies to return cash to shareholders at record levels.

S&P 500 companies paid shareholders a cash yield of 5.1% last year. That came from a combination of a 2% dividend yield and 3.1% from stock buybacks, according to FactSet, a research firm that issues quarterly reports on buybacks. Total cash returned was more than three times the recent 1.6% yield of the Barclays Aggregate Bond Index, and far more than most dividend strategies can produce.

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