Wall Street Loves 3 Strong Buy Dividend Stocks Spending Billions Buying Back Their Own Shares
These three strong blue-chip companies pay dependable and growing dividends and use billions of capital to repurchase their stock.
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One of our favorite buy signals from major corporations we cover at 24/7 Wall St. is aggressive buying back of their outstanding shares. Typically, this indicates that C-suite upper management is very bullish on the fundamentals of their company. And often it is a clear sign that they feel that the shares are undervalued.
For investors, seeing a massive buyback is an incredibly positive sign. That is because stocks trade primarily based on supply and demand. So, a cut in the number of outstanding shares can often help generate a price rise. Plus, a company could increase its stock’s value by limiting supply with a share repurchase.
Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations. A study from Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% between 1973 and 2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).
We screened our 24/7 Wall St. dividend/buyback stock research database, looking for strong blue-chip companies that pay dependable and growing dividends and use billions of capital to repurchase their stock. Three top companies were at the top of our screen, which makes sense for growth and income investors.
Why do we cover dividend stock companies buying back shares?
Dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.
Research from Hartford Funds, which considered annualized standard deviation as a measure of return volatility, found that between December 1969 and March 2024, high-dividend portfolios achieved an annualized return of 12.3%, compared to 10.5% for mid-dividend portfolios and 9.7% for low-dividend portfolios. The respective annualized standard deviations were 14.1%, 16%, and 20.8%, indicating that higher-yield portfolios experienced lower historical risk.
FedEx
Given the massive increase in internet shopping and sales, FedEx Corp. (NYSE: FDX | FDX Price Prediction) has a strong path for continued growth. The delivery giant provides transportation, e-commerce, and business services internationally and internationally. FedEx has initiated a $5 billion buyback, representing 7.6% of shares.
It operates through four segments:
- FedEx Express offers express transportation, small-package ground delivery, freight transportation, and time-critical transportation services.
- FedEx Ground provides small-package ground delivery services.
- FedEx Freight offers less-than-truckload freight transportation services.
- FedEx Services provides sales, marketing, information technology, communications, customer service, technical support, billing and collection, and back-office support services.
In addition, the company offers supply chain management solutions, air and ocean cargo transportation, specialty transportation, customs brokerage, and trade management tools.
Marathon Petroleum
With a substantial dividend and a huge $5 billion buyback covering 7.8% of its shares, this idea is perfect for conservative growth and income investors. Marathon Petroleum Corp. (NYSE: MPC) is an integrated, downstream energy company that operates through its Refining & Marketing and Midstream segments.
The Refining & Marketing segment refines crude oil and other feedstocks, including renewable feedstocks, at its refineries in the Gulf Coast, Mid-Continent, and West Coast regions of the United States.
The company sells refined products to wholesale marketing customers domestically and internationally, buyers on the spot market, independent entrepreneurs who operate primarily Marathon-branded outlets, and through long-term supply contracts with direct dealers who operate locations mainly under the ARCO brand.
The Midstream segment gathers, transports, stores, and distributes crude oil and refined products, including renewable diesel and other hydrocarbon-based products, principally for the Refining and Marketing segment via refining logistics assets, pipelines, terminals, towboats and barges, and others.
PPG Industries
Formerly known as Pittsburgh Paint and Glass, the company executed a $2.5 billion buyback, equal to 8.1% of shares. PPG Industries Inc. (NYSE: PPG) manufactures and distributes paints, coatings, and specialty materials in the United States, Canada, the Asia Pacific, Latin America, Europe, and elsewhere. It operates through two segments.
The Performance Coatings segment offers:
- Coatings
- Solvents
- Adhesives
- Sealants
- Sundries
- Software for automotive and commercial transport/fleet repair and refurbishing
- Light industrial coatings and specialty coatings for signs
- Wood stains; paints, thermoplastics, pavement marking products, and other advanced technologies for pavement marking for government, commercial infrastructure, painting, and maintenance contractors
- Coatings, sealants, transparencies, transparent armor, adhesives, engineered materials, and packaging and chemical management services for commercial, military, regional jet, and general aviation aircraft
The Industrial Coatings segment offers coatings, adhesives and sealants, and metal pretreatments, as well as services and coatings applications for:
- Appliances, agricultural and construction equipment
- Consumer electronics, automotive parts and accessories
- Building products
- Kitchenware
- Transportation vehicles and other finished products; and on-site coatings services
It also provides coatings for metal cans, closures, plastic and aluminum tubes for food, beverage and personal care, promotional, and specialty packaging; amorphous precipitated silica for tires, battery separators, and other end-users; TESLIN substrates for labels, e-passports, drivers’ licenses, breathable membranes, and loyalty and identification cards; and organic light emitting diode materials, displays and lighting lens materials, optical lenses, color-change products, and photochromic dyes.
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Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad, diverse career, including a stint as creative services director at an NBC affiliate in Austin, Texas, gives him unique insight into the financial industry.
Lee Jackson's journey in the financial industry spans more than 30 years, including nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career spanned pivotal sell-side Wall Street events, from the dot-com rise and bubble to the Long-Term Capital Management debacle, 9/11, and the Great Recession of 2008. This reflects his resilience and adaptability amid market volatility.
Lee Jackson’s practical financial industry experience, gained through a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing across various platforms. This unique combination allows him to shed light on the intricacies of Wall Street in a way only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.
Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.
