Wall Street Loves 3 Strong Buy Dividend Stocks Spending Billions Buying Back Their Own Shares

By Lee Jackson Published Apr 27, 7:44AM EDT

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Three major companies that Wall Street loves are buying back millions of shares costing billions of dollars.
Management at companies buying back shares are typically very optimistic about the future of their firms.
Wall Street stock analysts typically applaud share buyback efforts in a big way.
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Wall Street Loves 3 Strong Buy Dividend Stocks Spending Billions Buying Back Their Own Shares — © Worranan Junhom / Shutterstock.com

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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About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal 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 is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that 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.