Chart No. 204
Equities
6 min read
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Buybacks are now bigger than dividends. Again.
US companies will return about a trillion dollars through buybacks this year. Who sells them the shares is the more interesting question.
Aiko Mendel
Contributor
Illustrative data based on public sources.
SPX buybacks · dividends
US companies are on track to buy back about $1 trillion of their own shares this year, a record, and once again more than they pay out in dividends.
Who sells them the shares
When a company buys back stock, someone sells it. Over the last decade, the steady sellers have been pension funds rebalancing and insiders exercising options. Households, through index funds, have been the buyers of last resort.
Does it help shareholders
A buyback helps the shareholders who stay only if the shares are bought below what they are worth. Companies have a poor record on that: they buy most when prices are high and cash is plentiful, and least after a crash.
Not investment advice. Carry writes about markets; it does not tell you what to buy or sell. Charts use illustrative data unless a source says otherwise.
