Ten Companies Buying Back Huge Amounts of Their Own Stock

August 5, 2013 by Jon C. Ogg

Companies can return capital to shareholders in many ways. Dividends are one of the favored methods. So is retiring outstanding debt, as it decreases the amount of capital needed for debt service. Another one of the top ways is for a company to buy back its own stock. This has a twofold effect. First, it obviously can be a positive for the stock price, and secondly it also takes some of the float out of the market. Many companies repurchase stock for their employee stocks plans.

We looked through the data from FactSet and other top research firms and found 10 companies buying back more than $1 billion of their own shares. Like insider buying, it makes sense for investors. If the companies want to own their stock, you may want to as well.

CBS Corp. (NYSE: CBS) kicks off the list with a sizable $6 billion buyback in place. The company is also in the middle of a high-profile fight with Time Warner Cable Inc. (NYSE: TWC) over fees and its programming has been temporarily dropped in the New York, Los Angeles and Dallas. The Thomson/First Call price target for this top entertainment name is $60. Investors are paid a small 0.9% dividend.

Halliburton Co. (NYSE: HAL) is an oil services name in the process of a $3.3 billion buyback. The company recently pled guilty to destroying evidence in the Gulf of Mexico’s Deepwater Horizon disaster in 2010. The buyback and the settlement may give the stock the momentum it needs. The consensus price target for the stock is at $54, and investors are paid a 1.1% dividend.

Time Warner Cable Inc. (NYSE: TWC) as mentioned, is in the big fight with CBS. It also just announced a plan to buy back $4 billion more of its stock. Takeout and merger rumors also are swirling around this top stock to buy. The consensus price target is at $120, and shareholders are paid a 2.2% dividend.

Juniper Networks Inc. (NYSE: JNPR) announced in June a plan to repurchase $1 billion in stock, and it added a $1 billion additional amount when it announced preliminary earnings on July 23. The consensus price for this top tech name is $22.

Maxim Integrated Products Inc. (NASDAQ: MXIM) is buying back stock and consistently raising its dividend. The company engages in designing, developing, manufacturing and marketing various linear and mixed-signal integrated circuits worldwide. The consensus price objective for the stock is $30, and the company pays a solid 3.7% dividend.

Citigroup Inc. (NYSE: C) received approval in the late spring for a $1.2 billion repurchase program. The company also posted outstanding second-quarter earnings and appears to be hitting on all cylinders, both in the United States and around the world. The consensus price target for the stock is at $60, and investors get a tiny 0.1% dividend.

Priceline.com Inc. (NASDAQ: PCLN) has been on fire and seems destined to join the $1,000 stock price club. The company announced in May a $1 billion stock buyback program, and it also had tremendous second-quarter earnings. The consensus target for this top travel name is $945.

Merck & Co. Inc. (NYSE: MRK) replaced its head of research in April and is betting big on new medicines to treat cancer and Alzheimer’s, though those therapies are still years away from being available to patients. The company also announced a $5 billion buyback of its stock in May. The consensus price target for the drug giant is $52. Investors receive a solid 3.5% dividend.

Apple Inc. (NASDAQ: AAPL) seems to have an exciting array of new products to spring on its legions of followers. From the iPhone 5s or 6, enhancements in Apple TV, to a possible iWatch, Wall Street may be in for a surprise. The company sold $17 billion in bonds in late April to help finance what ultimately may be a total of $60 billion in share buybacks by the end of 2015. The consensus price target for the iconic tech stock is $525, and investors receive a 2.8% dividend.

Wal-Mart Stores Inc. (NYSE: WMT) announced a $15 billion share repurchase plan at its shareholder meeting back in June. The $15 billion program replaces the current $15 billion share repurchase program begun in 2011. About $712 million is left under that program. The consensus price target for the nation’s largest retailer is $81.50. Investors are paid a 2.4% dividend.

It is important to remember that just because a company is buying back its stock does not mean that it will trade higher. Some major corporations with huge stock floats like Exxon Mobil Corp. (NYSE: XOM) have had multibillion dollar buyback programs for years. Anyway you look at it though, a company that consistently buys back stock has the potential for a solid future.

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