Cambria Fund Profile: Shareholder Yield Suite

The episode begins by addressing a fundamental limitation in how investors evaluate stock returns. While dividends have historically contributed roughly half of long-term U.S. stock returns since the 1870s, the S&P 500's current dividend yield of approximately 1% represents a historical low. However, focusing solely on dividends misses the complete story of cash returned to shareholders. MedFavor explains that companies now distribute roughly 40% of earnings as dividends, down from 60% a century ago, with the difference increasingly directed toward share buybacks. The SEC's 1982 Rule 10b18 made buyback programs more legally defensible, causing them to rise from near-zero to equaling or surpassing dividends by the late 1990s. Notably, the total cash returned to shareholders as a percentage of profits has remained relatively steady; only the mix has shifted. Currently, S&P 500 companies returned approximately $1.66 trillion to shareholders over 12 months through September 2025, with roughly 60 cents of every dollar flowing through buybacks rather than dividends. Shareholder yield captures both components, providing a more complete answer to how much cash companies actually return to shareholders. Buybacks function similarly to dividends but offer tax advantages for taxable investors since the value is reflected in share price appreciation rather than triggering immediate taxable events. MedFavor illustrates this with an example: two identically-priced companies with identical dividend yields, where one also conducts share buybacks, will have different total shareholder returns despite identical dividend yields. Warren Buffett's 1984 guidance on buybacks is cited: buybacks benefit shareholders most when executed by wise CEOs buying undervalued shares, but destroy value when overconfident CEOs purchase overvalued stock. Cambria's systematic approach functions as a funnel: starting with a broad universe of stocks, the process ranks securities by shareholder yield (dividends plus net buybacks), assesses valuation and quality metrics, isolates top performers with strong debt retirement, and applies momentum screening to avoid value traps. This yields portfolios of approximately 50-100 stocks, equally weighted, rebalanced quarterly, across diversified sectors. The strategy produces notably deeper value exposure than peers. As of August 2026, the flagship Cambria Shareholder Yield ETF (SYLD) traded at a price-to-earnings ratio of 13.7 versus 18.1 for its Morningstar category, with similar discounts across price-to-book, price-to-sales, and price-to-cash flow metrics. The shareholder yield framework extends globally through five ETFs: SYLD (U.S. stocks, market cap agnostic), FYLD (foreign developed stocks), EYLD (emerging markets), LYLD (large-cap U.S.), and MYLD (micro and small-cap U.S.). Over the previous decade through August 2026, these funds demonstrated strong relative performance: SYLD ranked in the 5th percentile of its Morningstar mid-cap value category among 337 funds, FYLD in the 13th percentile among 40 foreign small-mid value funds, and EYLD in the 3rd percentile among 540 diversified emerging market funds. However, MedFavor acknowledges that SYLD underperformed its category in both 2024 and 2025—the first back-to-back underperformance since inception in 2013—demonstrating that sound strategies experience stretches of underperformance. He emphasizes that rules-based systematic processes are designed to maintain discipline regardless of market conditions. The performance data shows mixed results against the S&P 500 index: over 10 years, SYLD returned 13.26%, underperforming the S&P 500's 15.51%; over five years, SYLD returned 6.73% versus the S&P 500's 13.41%; and since inception in May 2013, SYLD returned 12.12% versus the S&P 500's 14.33%.