What is Cash Flow to Stockholders?

Cash flow to stockholders is the amount of cash that a company pays out to its shareholders. This amount is the cash dividends paid during a reporting period. Investors routinely compare the cash flow to stockholders to the total amount of cash flow generated by a business, to measure the potential for greater dividends in the future. If dividends are paid in the form of additional stock or assets other than cash, this is not considered to be cash flow to investors.

An alternative approach to this measurement is to subtract from cash dividends any cash received from investors to buy additional shares from the company, and then add any cash paid to investors to repurchase their shares. This approach can result in a negative cash flow to stockholders figure. The calculation is as follows:

Dividends paid + Stock repurchases − Proceeds from new equity issuances = Cash flow to stockholders

Example of Cash Flow to Stockholders

As an example of cash flow to stockholders, a business pays out $40,000 in cash dividends, buys back $10,000 of shares from investors, and sells $70,000 of stock to investors. The result is negative cash flow to stockholders of $20,000. This is calculated as follows:

$40,000 Dividends paid+ $10,000 Stock buybacks - $70,000 Stock sale = -$20,000 Cash flow to stockholders