Companies With the Largest Stock Buybacks of All Time

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.

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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.

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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.

> Market cap: $740 billion
> Dividend yield: 1.5%

Back in April of 2014, Apple said it planned to use more than $130 billion of cash under the expanded program by the end of calendar 2015, increasing its share repurchase authorization to $90 billion from the $60 billion target disclosed in 2013. At the earnings report in January 2015, Apple said: “We spent over $8 billion on our capital return program, bringing total returns to investors to almost $103 billion, over $57 billion of which occurred in just the last 12 months.” That is inclusive of dividends and buybacks combined, and that former seven-for-one stock split allowed it to be included in the Dow Jones Industrial Average.

What is almost a certainty here is that Apple will increase its dividends again. Still, investors such as Carl Icahn are likely to outline how more buybacks would be beneficial as well. Icahn himself once proposed even larger buybacks, but he has since backed off, other than passive commentary on the matter. Apple has more than half of its business outside of the United States now, so it was not alone in recent communications that most of its cash is overseas.

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Cisco Systems
> Market cap: $143 billion
> Dividend yield: 3.0%

Cisco might not hold any records for one-time stock repurchase announcements. Still, John Chambers has used buybacks to keep the float lower and to offset employee stock options and shares that were used to make its endless number of acquisitions. Cisco is a company that deserves kudos for clear communications in its earnings releases, as it spells out each time how many shares were bought and for what price, as well as showing what the cumulative tally has been over time. The flip side of the equation is that the most recent count of 5.1 billion or so shares outstanding compared to about 5.8 billion as of the same time in 2009.

As of January 24, 2015, Cisco had repurchased and retired 4.4 billion shares of its own common stock. It was also profitable if you look at the average share price versus recent trading, as the average price for stock buybacks was listed as $20.73 per share, bringing the total buybacks to about $90.7 billion since the company began its stock buyback plan.

Exxon Mobil
> Market cap: $151 billion
> Dividend yield: 3.1%

Exxon Mobil may have slowed its share buybacks as the price of oil has plunged, but the oil and gas giant used over $13 billion for share buybacks alone in the year 2014. What is amazing is just how many shares this company has bought back — even in the wake of its $40 billion or so acquisition of XTO Energy in 2010.

Exxon had more than 6 billion shares outstanding as recently as 2006, but this was down to about 4.2 billion shares most recently. Exxon’s buybacks have been jokes about taking the company private over the next 15 to 20 years, but it almost certainly will take a return to higher oil for that to occur. Exxon may now focus on raising its dividend, a move that was still expected to occur in the first half of 2015, even with lower oil prices.

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General Electric
> Market cap: $287 billion
> Dividend yield: 3.3%

General Electric is the whole impetus for this article, after announcing its $50 billion buyback plan. Investors will want to know that GE has already shrunk its outstanding share count from around 10.6 billion shares to about 10.0 billion shares. Buybacks are not new here, but what is new is that GE, at least as of the new plans on Friday, intends to shrink its share count down to 8.0 billion to 8.5 billion by 2018.

GE’s restructuring into an industrial conglomerate is going to generate billions of dollars for the parent company — $30 billion or so from real estate sales, near term. Another part of the funding will be from a repatriation of some $36 billion in capital that is currently locked up overseas, which will create a $6 billion tax payment. The spin-off of the post-IPO shares of Synchrony Financial (NYSE: SYF) will come into play as far as GE’s plan to now keep the dividend static through 2016, where GE may still be able to claim that the dividend was raised without an official payout boost due to the size of Synchrony.

> Market cap: $151 billion
> Dividend yield: 3.1%

Intel’s 2014 annual report signaled that the board’s original approval of share purchases had been amended to allow up to $65 billion for share buybacks, including some $20 billion of an increase that had been approved in 2014, with some $12.7 billion remaining available to be used for buybacks as of the end of 2014. Intel said that, as the end of 2014, it shrank the float from 5.6 billion shares to 5.1 billion in just five years, with a total of $54.2 billion in combined dividends and buybacks sent to shareholders in that five years.

Now, go back even further to January 2011. At that time, Intel said:

Since the company’s stock buyback program began in 1990, Intel has repurchased approximately 3.4 billion shares at a cost of approximately $70 billion. Taken together since their inception, Intel’s dividends and stock buyback program have returned approximately $91 billion to shareholders.

> Market cap: $151 billion
> Dividend yield: 3.1%

IBM has been the king of financial engineering to grow earnings per share, having reduced its share count even in 2013 by a third since the beginning of 2000. The company keeps buying back more and more shares as well. Its core business has not grown, but spending billions has helped it shrink the float even with the dilution of stock options, restricted stock and other share-growing activities tech companies have.

While IBM has used less cash to repurchase stock of late, at the end of December 2014 IBM had approximately $6.3 billion remaining from the current share repurchase authorization and promised to seek higher buyback approvals ahead. After shrinking its float by 8% or so in the past year, IBM has spent well over $160 billion between dividends and buybacks alone since 2000 to return capital to shareholders. Big Blue now has less than a billion shares outstanding.

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> Market cap: $342 billion
> Dividend yield: 3.0%

Microsoft has been buying back stock on and off for years now, and its dividend yield is impressive. Growth has been sporadic and a restructuring to cloud and mobile first under Satya Nadella may have run into headwinds after a stellar reception in 2014. A multibillion debt filing from February indicated that Microsoft still had $31 billion remaining under its prior $40 billion stock buyback plan.

What investors need to consider here is that Microsoft has had two prior stock buyback plans of $40 billion each, so if it completes the planned buybacks by the end of 2016, then it will have used $120 billion or so to repurchase shares. Also note that Microsoft’s shares outstanding count is still 8.2 billion. That means it takes a lot to move the needle.

Procter & Gamble
> Market cap: $225 billion
> Dividend yield: 3.1%

This is not a company that investors automatically think of for huge stock buybacks. After all, consumer products rarely come with the same margins as software and popular consumer electronics gadgets. Still, if you go back to early in 2005, around the time Procter & Gamble planned to acquire Gillette, the company signaled that it would spend around $20 billion acquiring its own shares for the 18 months ahead. The Wall Street Journal at the time had said it would be $18 billion to $22 billion.

In 2005, it was not common at all to see companies announce even a $10 billion buyback — let alone $20 billion. As recently as 2008, Procter & Gamble had just over 3 billion shares outstanding, and it now has closer to 2.7 billion. With a Buffett deal for Duracell and with the company divesting so many non-growth brands, it seems logical that the consumer products giant could look to shrink its float even further. The earnings report from January 2015 showed that it used $4.25 billion in 2014 and $4.0 billion in 2013 for share buybacks.

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As you can see, even with an untallied amount of stock being bought back, the hurdle to be among the top buybacks is now $20 billion. Of the S&P 500 Index, 46 companies now have market caps of $100 billion or higher — and 15 of those have market caps of $200 billion or higher.

Other companies have bought back billions worth of stock in recent years. Companies such as Wal-Mart, Hewlett-Packard, Qualcomm, McDonald’s, Wells Fargo and the major banks, AT&T, ConocoPhillips and others have also spent billions in large buyback plans. Companies like Time Warner have as well, but companies that have broken up have not been included here.

Again, calculating the exact tally is difficult. Many sites have differing numbers, and even annual reports and investor relations websites are not always forthcoming about how much stock is being bought back. There are many explanations for this, but that is another matter entirely.

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