In late October, global markets have once again entered a typical event-heavy window: the Q3 earnings season is winding down, divisions over the Fed's policy path have yet to fully converge, and the AI industry's capital expenditure narrative still dominates global capital preferences. Beyond this familiar mainline, a more fundamental question deserves renewed scrutiny from Hong Kong and Taiwan investors at quarter-end—why buy US stocks? The answer may lie not only in the short-term halo of AI and tech giants, but in the shareholder return culture that has persisted in the US market for decades.
Shareholder Return Culture: The Underlying DNA of the US Stock Market
Compared with other major markets, the most distinctive structural feature of US stocks is the near-institutionalized commitment of listed companies to cash returns. Such returns rest on two legs: dividends and buybacks. S&P 500 constituents return cash to shareholders through these two channels at a scale that has long led global markets; even in years of sharp volatility, this practice rarely breaks, becoming an implicit discipline that spans bull and bear cycles.
Even more notable is the growth of dividends. The US market has a long-verified phenomenon known as Dividend Aristocrats—companies that have raised dividends for 25 consecutive years or more. Consumer and healthcare leaders such as Coca-Cola and Johnson & Johnson have raised payouts consistently for decades, and many established companies' dividends outpace inflation year after year. A simplified illustration: a company with an initial dividend yield of about 2%, if it raises payouts at nearly 10% per year, will see the cash return rate on the original purchase cost rise markedly after ten years—all nearly independent of short-term price swings. For long-term investors, this means holding not just exposure to price fluctuations, but a steadily growing, predictable cash flow curve.
Buybacks: The Invisible Buyer in Bear Markets
If dividends are an explicit promise, buybacks are an implicit moat. The mechanism is simple: companies use profits to buy back their own shares and cancel them, reducing shares outstanding and passively lifting earnings per share when total profits are unchanged. When market sentiment is low and external capital waits on the sidelines, listed companies themselves often become the most important marginal buyers, providing bottom support for prices. In past deep corrections, the stabilizing role of buyback funds was repeatedly observed—one reason US stocks often recover faster than other markets after drawdowns.
Looking at the structural trends in US stocks in recent years, it is easy to see that large tech companies such as Apple and Microsoft are both protagonists of the AI narrative and the heaviest buyback groups. The combination of buybacks and growth narratives allows these companies to absorb volatility through continuous per-share value accretion even at elevated valuations. Many institutions include buyback scale among their core reasons for long-term holding—precisely for this reason.
- Dividends provide reliable cash flow, buybacks provide continuous per-share value accretion—together they form the foundation of compounding;
- In market downturns, buyback funds act as the invisible buyer, cushioning the impact of volatility on long-term positions;
- Management expresses its judgment on company prospects with real money, a signal often more credible than verbal guidance.
For Hong Kong and Taiwan Investors: A Path Complementary to High-Yield Strategies
For investors accustomed to Hong Kong high-yield stocks and Taiwan electronics blue chips, the US shareholder return culture offers distinct allocation value. Hong Kong's banks and utilities excel at static high dividends but have relatively limited growth and reinvestment room; US dividend growth companies typically feature mid-to-low initial yields with sustained high growth, often producing a steeper long-term total return curve. One static, one dynamic—the two complement rather than replace each other.
At the tool level, choices for Hong Kong and Taiwan investors are quite mature: Hong Kong investors can open US stock accounts directly through local or international brokers; Taiwan investors can choose the sub-brokerage channel or offshore brokers. For those wishing to package shareholder return strategies in one click, broad ETFs tracking the S&P 500, as well as strategy ETFs focused on dividend growth and buyback factors, are low-threshold vehicles that naturally diversify single-company business risk.
Tax matters require advance planning. The US withholding tax on dividends for non-resident investors is currently generally 30%, applying to both Hong Kong and Taiwan investors; buybacks involve no withholding—one reason many long-term funds prefer low-dividend, high-buyback companies, or allocate via ETFs as a whole. Markets are watching the progress of a US-Taiwan tax agreement; if concluded in the future, it would further improve cash flow efficiency for Taiwan investors and is worth tracking.
Risks and Pacing: Long-Term Logic Does Not Mean Buy and Forget
It must be emphasized that shareholder return culture is the foundation of US stocks' long-term appeal, not a short-term timing signal. Three variables still warrant attention at this point:
Valuation Digestion Takes Time
Driven by the AI mainline, expectations in some sectors are fully priced; if earnings delivery slows, high valuations and heavy buybacks cannot fully hedge drawdown pressure. Return culture can thicken per-share value but cannot eliminate volatility itself.
Currency Is the Invisible Second Position
Dollar cycle swings directly affect the real returns of Hong Kong and Taiwan investors. The same US stock gains can be significantly eroded under currency headwinds, so allocating to US stocks requires incorporating room for currency hedging tools into the overall framework.
Policy Environment May Periodically Change Capital Behavior
Interest rate paths, tax adjustments, and regulatory discussions targeting buybacks may all affect the pace and manner of corporate cash returns. Such variables usually do not change long-term trends but alter relative value over shorter phases.
A more prudent approach, therefore, is to treat the US shareholder return factor as a ballast component of Q4 global asset allocation, not the sole offensive direction: use broad ETFs to capture market beta, use dividend growth and buyback factors to enhance cash flow resilience, while retaining active management of currency exposure and position pacing.
Conclusion
Why buy US stocks? The AI wave gives today's answer, while shareholder return culture gives the answer that spans cycles. When sustained dividend growth is combined with the mechanical force of buybacks, long-term compounding no longer depends on precisely judging short-term fluctuations, but is built on companies' real-money discipline of returning cash. For Hong Kong and Taiwan investors, understanding this underlying logic amid quarter-end market noise is more valuable than chasing any single quarter's mainline.
