Wednesday, August 19, 2015

Buybacks Reach a Record

Corporate buybacks have been surging since the financial crisis, with the S&P 500 companies spending nearly $2.3 billion on them since 2009,  according to a new report from Aranca Investment Research. Last year’s $553 million in buybacks fell just short of the peak reached in 2007, while the $904 million spent on buybacks and dividends combined set a new record.

This year looks even better: The companies in the S&P 500 are poised to spend more than $1 trillion on buybacks and dividends in 2015, breaking the record set last year. Buyouts and dividends totaled $237 million in the first quarter alone.

This is all of particular interest to investors. Over the past decade, the S&P 500 buyback index — which measures the performance of the 100 S&P stocks with the highest buyback ratios – delivered 11.3 percent annualized returns, easily beating the overall 7.8 percent annual returns from the entire S&P 500.

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