20 Fresh Stock Buybacks Could Send $100 Billion Back to Shareholders

December 16, 2017 by Jon C. Ogg

Investors love when companies pay solid dividends and when they announce strong stock buyback plans. With the tax reform goal of taking corporate taxes down to 21% from 35%, there is still a debate over how much of this money will go back to investors versus how much will be used for capital spending or hiring.

It is fairly well assumed by many investors that corporations will use the windfalls of lower taxes and the repatriation of foreign capital held overseas almost immediately to reward their shareholders. This would be in the form of additional stock buybacks and dividends first, followed by acquisitions as another opportunistic way to fund growth or to build companies further for their shareholders. It seems, at least as of now, that some of the savings and overseas capital coming back will be used for hiring and capital spending, but that likely will be slower to be seen.

24/7 Wall St. has tracked an enormous number of stock buyback plans announced in recent weeks. This almost certainly was around the assumption of increased cash after taxes and from likely repatriation. It turns out that companies have announced a total of roughly $100 billion in new or additional share buyback authorizations.

What investors need to consider is that many more companies than just these have announced share buyback plans, but here we cover buyback plan announcements of $1 billion and higher. Additional notes have been made around dividends (if applicable), and we have tried to keep recent news and total market capitalization in mind on each buyback.

Standard & Poor’s recently pointed out that companies are still being aggressive with share buybacks, and we have to consider that this buyback continuation is also taking place with the stock market at all-time highs. Companies might be less enthusiastic about buybacks if they thought the market, or their own company’s stock, was overvalued. In fact, members of the S&P 500 repurchased a whopping $129.2 billion worth of their own common shares in the third quarter of 2017 alone.

Adding up the top 20 fresh buyback announcements comes to total of about $100 billion. With the passage of tax reform looking almost certain, and with companies continuing to prove that all-time highs in the market will not hurt spending cash on share buybacks, the continuation of buybacks looks promising. Here are the major stock buyback announcements that have been made recently.

Boeing Co. (NYSE: BA) announced in December that it is raising its dividend after having been the best performing Dow stock of 2017. The aerospace and defense giant also established a new $18 billion share buyback program that was just over 10% of its market value.

Home Depot Inc. (NYSE: HD) announced a new $15 billion buyback plan going into its investor day, and that is after billion have already been spent on buybacks. Home Depot’s market cap is now over $200 billion, and its shares were up about 36% so far in 2017.

Oracle Corp. (NYSE: ORCL) may have seen its shares fall with earnings after showing that its cloud business was growing slower than analysts were hoping. That being said, Oracle plans to continue supporting its stock on its own with its more than $70 billion cash surplus. Oracle increased the existing buyback authorization by $12 billion for share repurchases. Oracle has a $200 billion market cap, and many analysts remained positive after earnings.

Merck & Co. Inc. (NYSE: MRK) announced around Thanksgiving that it would buy back up to $10 billion worth of stock. It also hiked its dividend, but the stock weakness ahead of this announcement seems to have been targeted with the buyback news. Merck’s market cap is roughly $150 billion, and its shares are actually down about 4% so far in 2017, even after considering its strong dividend.

Honeywell International Inc. (NYSE: HON) announced in early December that its board has authorized the repurchase of up to $8 billion worth of its common stock. That is roughly 5% of the $116 billion market cap. Honeywell also has been a buyer of its shares in recent years, and its stock was last seen up about 32% year to date.

Anthem Inc. (NYSE: ANTM) set an increase of $5 billion for its share buyback plan at the start of December, which leaves a total of $7.3 billion in total current dollars it can use for share buybacks. That also compares to a $58 billion market cap for the health insurance giant. Anthem shares were last seen up over 50% so far in 2017 as well.

Bank of America Corp. (NYSE: BAC) must have realized it is a winner from rate hikes and deregulation, particularly considering its recent return to buybacks and dividends. The company announced in the first week of December that it has set its goal for stock buybacks at up to an additional $5 billion. What stands out here is that the repurchases were set to be completed by June 30, 2018. Bank of America currently has a $300 billion market cap, and its shares are up about 31% so far in 2017.

Mastercard Inc. (NYSE: MA) recently approved a 25% hike to its dividend, but it also approved a buyback of up to $4 billion worth of its common shares. Mastercard’s market cap is over $150 billion now, but the company has been somewhat less aggressive when it comes to sending money back to shareholders. Still, its shares were up better than 40% so far in 2017.

Baker Hughes, a GE Company (NYSE: BHGE) set a $3 billion stock buyback around GE’s new investor focus early in November. Some of these shares to be purchased will be from parent company GE, which owns more than 62% of the combined company. Whether the buyback occurs remains to be seen in light of GE’s woes. Baker Hughes has a market cap of $35 billion, but this seemed somewhat opportunistic considering that Baker Hughes shares are down over 30% when the broader market is up massively.

Humana Inc. (NYSE: HUM) currently is considered a potential merger candidate by some investors, but the company announced on December 14 that its board approved a $3 billion share repurchase authorization through the end of 2020. This larger buyback plan replaced Humana’s previous $2.25 billion plan, but Humana said that the prior plan had no further capacity. Humana has a $36 billion market cap.

United Continental Holdings Inc. (NYSE: UAL) announced in the first week of December that it approved an additional $3 billion for stock buybacks. According to the company at the time, that represents about 17% of the outstanding shares. Maybe those bag fees and kicking low ticket price passengers off isn’t so bad after all, and the company said it expects to have completed its most recently authorized July 2016 $2 billion share repurchase program by the end of December 2017. The shares were last seen down about 12% so far in 2017.

PPG Industries Inc. (NYSE: PPG) announced on December 14 that its board approved the repurchase of $2.5 billion of outstanding common shares. The plan is effective immediately and does not come with an expiration date. On top of the new buyback, PPG said the new program in addition to its existing buyback plan from 2016, which still had approximately $1.4 billion remaining. PPG has a $29 billion market cap.

American Tower Corp. (NYSE: AMT) announced on December 7 that its board of directors approved the repurchase of up to $2 billion worth of common stock. American Tower currently has approximately $345 million remaining under its existing stock repurchase program, which was approved back in 2011. Its market cap is roughly $60 billion.

Kellogg Co. (NYSE: K) announced on December 15 that it will spend up to $1.5 billion in share buybacks over the course of 2018 and 2019. Its previous $1.5 billion authorization expires on December 31, 2017, and Kellogg has a $22.5 billion market cap.

Prudential Financial Inc. (NYSE: PRU) gave its 2018 guidance on December 14, and its board also included in its SEC filing that it has authorized the repurchase of up to $1.5 billion of its outstanding common shares during calendar 2018. Prudential has a market cap of almost $50 billion.

T-Mobile US Inc. (NASDAQ: TMUS) announced on December 6 that its board has authorized a stock repurchase program for up to $1.5 billion of its common stock through December 31, 2018. While the number is impressive considering a $52 billion market cap, T-Mobile also included a note in its release that its majority shareholder (Deutsche Telekom) is also considering plans to purchase additional shares of T-Mobile. This means the buyback impact could be enhanced or magnified when it comes to actual shares being purchased.

Waste Management Inc. (NYSE: WM) announced on December 14 that it was increasing its dividend and that it was authorizing the repurchase of up to $1.25 billion of its common stock with an immediate effective date. Waste Management has a $37 billion market cap.

Dover Corp. (NYSE: DOV) announced on December that it would spin off its wellsite business into a public company of its own in 2018, but the company also announced that it sees spending $1 billion for common share repurchases in 2018. Dover’s market cap is roughly $15 billion.

Edwards Lifesciences Corp. (NYSE: EW) announced on December 7 that its board of directors had authorized a new share repurchase program of up to an additional $1 billion worth of its outstanding common shares. The company also announced that in November it entered into an accelerated share repurchase agreement to acquire $150 million worth of its common stock, and earlier in the fourth quarter the company repurchased approximately $100 million of common stock. Edwards Lifesciences has a market cap of roughly $24 billion.

DaVita Inc. (NYSE: DVA) announced on December 6 that the company was selling its medical groups business unit to UnitedHealth for $4.9 billion. While the company plans to pay down debt and to make some diversifying acquisitions, DaVita also showed in its release that, on top of general corporate purposes, the proceeds from the transaction will be used for significant stock repurchases over the one to two years following the closing of the transaction. If we use a figure of at least 20% as being significant, then roughly $1 billion or more should be heading toward shareholders for buybacks. Its market cap is roughly $13 billion.

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On top of these major buyback plans covered here, a large number of companies have announced buyback plans under $1 billion. These may sound smaller in total dollars, but some of them can be impressive when considering the total market caps of these companies.