Now's is easy to see why Congress wanted a piece of S&P 500 stock buybacks. They're very lucrative.
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Ten S&P 500 companies, including Alphabet (GOOGL), RTX (RTX) and Meta Platforms (META), bought back $91 billion of their own shares in the fourth quarter, says just released data from S&P Dow Jones Indices. And shares of these top 10 stock buyback companies are enjoying a bump. They're up 10.4% this year on average, topping the S&P 500's 7.9% rise.
Buybacks are popular, despite Congress slapping them with a 1% tax in 2023. "Fourth quarter 2023 share repurchases were $219.1 billion, up 18% from third quarter 2023's $185.6 billion expenditure, and up 3.7% from fourth quarter 2022's $211.1 billion," said Howard Silverblatt of S&P Dow Jones.
Why S&P 500 Companies Buy Back Shares
The top driver for S&P 500 stock buybacks is simple. The companies are trying to stop their number of shares from inflating due to issuing stock awards to executives and employees, Silverblatt says.
As a result, the number of shares outstanding at the S&P 500 companies is falling by smaller amounts each year. Additionally, the $795.1 billion companies in S&P 500 spent on buybacks in 2023 is actually down from $923 billion in 2022.
But buybacks are still mostly paying off for investors of most the companies making them.
Biggest S&P 500 Buybacks
Ironically, the two largest buyers of their own shares in the fourth quarter don't highlight the trend.
Apple (AAPL) remains the heavyweight for buying its own shares. It paid $22.7 billion in the fourth quarter on its stock. That's more than any other company in the S&P 500. And yet, its shares are down more than 9% in the year so far.
Similarly, Alphabet was the No. 2 biggest buyer of shares to the tune of $16.2 billion. And its shares are up less than 6% this year, lagging the S&P 500.
But that's where most of the large disconnect end. Seven of the 10 largest buyers of stock are beating the S&P 500 this year.
Meta's Buyback Bounce
Meta is the best example of a huge post buyback gain. Shares are up more than 40% this year. The company in the fourth quarter of 2023 ponied up $8.2 billion buying back its stock.
Meanwhile, defense contractor RTX paid $10.3 billion buying its shares in the fourth quarter. That ranks it No. 3 in the S&P 500. And its shares are up 11% this year.
Expect more buybacks if S&P 500 companies keep making money hand over fist, like they are now.
Biggest S&P 500 Buybacks
In the fourth quarter of 2023
Company | Symbol | Q4 2023 buyback ($ millions) | YTD % ch. |
---|
Apple | (AAPL) | $22,730 | -9.1% |
Alphabet | (GOOGL) | 16,191 | 5.9% |
RTX | (RTX) | 10,283 | 11.0% |
General Motors | (GM) | 9,996 | 13.6% |
Broadcom | (AVGO) | 8,290 | 11.1% |
Meta Platforms | (META) | 8,165 | 40.1% |
Exxon Mobil | (XOM) | 4,656 | 12.2% |
Microsoft | (MSFT) | 4,000 | 11.4% |
Visa | (V) | 3,752 | 9.8% |
Comcast | (CMCSA) | 3,521 | -1.9% |
Sources: S&P Global Market Intelligence, IBD
FAQs
Biggest S&P 500 Buybacks
Company | Symbol | Q4 2023 buyback ($ millions) |
---|
Exxon Mobil | (XOM) | 4,656 |
Microsoft | (MSFT) | 4,000 |
Visa | (V) | 3,752 |
Comcast | (CMCSA) | 3,521 |
6 more rowsMar 19, 2024
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What happens if you own all the shares of a company? ›
You now own the company. When the election for Board of Directors happens, you get all of the votes, and you can elect a board that will select you as the President and CEO of the company. If you buy all of the stock, it is now YOUR company.
What are shares in business? ›
Shares are units of stocks issued by a corporation that represent ownership. They are sold to investors and traders to raise capital for the company. Many businesses issue stocks and shares when they need funds for research and development, expansion, or other growth opportunities.
Why are so many companies buying back stock? ›
A company might buy back its shares to boost the value of the stock and to improve the financial statements. Companies tend to repurchase shares when they have cash on hand and the stock market is on an upswing. There is a risk that the stock price could fall after a share repurchase.
Which companies are buying back their stock in 2024? ›
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Name | Reported | Buyback Amount |
---|
TREX Trex Company | May 9, 2024 | $5.16M |
WTM White Mountains Insurance | May 9, 2024 | $7.93M |
XOMA Xoma Corp. | May 9, 2024 | $13.12K |
BERY Berry Global Group Inc | May 9, 2024 | $452.45B |
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What is the 10 shareholder rule? ›
(B) 10-Percent shareholder The term “10-percent shareholder” means— (i) in the case of an obligation issued by a corporation, any person who owns 10 percent or more of the total combined voting power of all classes of stock of such corporation entitled to vote, or (ii) in the case of an obligation issued by a ...
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What happens if you own 50% of a company's stock? ›
A majority shareholder is a person or entity who holds more than 50% of shares of a company. If the majority shareholder holds voting shares, they dictate the direction of the company through their voting power.
Do shares make you money? ›
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There are two ways you can earn money from shares. First, you buy the shares at a price that you hope will increase over time. This is called capital gain, growth, or return. Second, you may receive an income in the form of dividend payouts.
What is the biggest share buyback ever? ›
After better than expected quarterly results, Apple Inc. has announced a share buyback which is unprecedented in history: a whopping 110 billion dollars. Shares of the US tech giant soared over six per cent on Friday, after the announcement.
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Try another indicator
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