The debate over whether investors prefer stock buybacks or dividends will continue in the years ahead. Companies use both tools under corporate governance for returning capital to their shareholders. And now the $50 billion buyback plan announced by General Electric will bring stock buybacks and dividends under focus again. 24/7 Wall St. wanted to evaluate two things about stock buybacks in modern times: the largest buyback announcements at one time and the companies that have bought back the most stock.
S&P Capital IQ showed that companies in the S&P 500 spent over $553 billion buying back stock in 2014 alone, the highest reading next to the $589 billion spent in 2007 for stock buybacks from S&P 500 companies. S&P further indicated that buybacks and dividend growth were expected to continue in 2015.
The list of largest share buybacks is dominated by technology giants. This should be of little surprise. If one sector can generate billions of dollars quickly and then find themselves in need of offsetting dilution or shrinking their total share count, technology is at the top of the list.
24/7 Wall St. has evaluated the biggest stock buybacks of modern times. A true raw number of total dollars used for share buybacks is very difficult to generate down to even the closest billion. Just a few technology giants and mega-cap companies have spent literally hundreds of billions combined in modern times to repurchase their shares.
With General Electric Co. (NYSE: GE), the $50 billion stock buyback announced in April 2015 will be among the biggest ever in a single announcement. GE’s annual report showed that it used $1.9 billion for buybacks in 2014, and the buyback plan in 2013 was for up to $5.1 billion. It has spent much more than this in total over the years, what looked to be over $20 billion in theprior 10 years or so.
24/7 Wall St. has evaluated big buybacks from the following: Apple Inc. (NASDAQ: AAPL), Cisco Systems Inc. (NASDAQ: CSCO), Exxon Mobil Corp. (NYSE: XOM), General Electric Co. (NYSE: GE), Intel Corp. (NASDAQ: INTC), International Business Machines Corp. (NYSE: IBM), Microsoft Corp. (NASDAQ: MSFT) and Procter & Gamble Co. (NYSE: PG). A reference has also been provided for each company’s market cap, and color on future plans and dividends has been included for each company as well.
If you want to know why the total buybacks are not exact to the penny at each company, there is a whole host of reasons. Many companies do not show their total number of dollars back to the inception. Shares outstanding through time include dilution from stock options, convertible preferred shares that converted, restricted stock and even from acquisitions. Independent websites that track buybacks often have numbers that simply are all over the place. Many companies also group their dividends and buybacks together for total capital returned to their shareholders.
As a reminder, many buybacks do not reduce the total share count on a 1:1 basis through time. Companies issue stock options and give restricted stock grants, or they use treasury shares to make acquisitions — all of which can offset or minimize the raw number of shares being repurchased against the float. Still, you will see that companies have to now make announcements of $20 billion or so to make the top buybacks of all-time in the year and years ahead.
As a reminder, April is the beginning of corporate earnings season for the first quarter of 2015. This means that the buyback count is certain to grow even further.