Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Investors Business Daily
Investors Business Daily
Business
MATT KRANTZ

Ten Companies Create Huge Windfall Buying Back Heaps Of Stock

Now's is easy to see why Congress wanted a piece of S&P 500 stock buybacks. They're very lucrative.

Ten S&P 500 companies, including Alphabet, RTX and Meta Platforms, bought back $91 billion of their own shares in the fourth quarter, says just released data from S&P Dow Jones Indices. And shares of these top 10 stock buyback companies are enjoying a bump. They're up 10.4% this year on average, topping the S&P 500's 7.9% rise.

Buybacks are popular, despite Congress slapping them with a 1% tax in 2023. "Fourth quarter 2023 share repurchases were $219.1 billion, up 18% from third quarter 2023's $185.6 billion expenditure, and up 3.7% from fourth quarter 2022's $211.1 billion," said Howard Silverblatt of S&P Dow Jones.

Why S&P 500 Companies Buy Back Shares

The top driver for S&P 500 stock buybacks is simple. The companies are trying to stop their number of shares from inflating due to issuing stock awards to executives and employees, Silverblatt says.

As a result, the number of shares outstanding at the S&P 500 companies is falling by smaller amounts each year. Additionally, the $795.1 billion companies in S&P 500 spent on buybacks in 2023 is actually down from $923 billion in 2022.

But buybacks are still mostly paying off for investors of most the companies making them.

Biggest S&P 500 Buybacks

Ironically, the two largest buyers of their own shares in the fourth quarter don't highlight the trend.

Apple remains the heavyweight for buying its own shares. It paid $22.7 billion in the fourth quarter on its stock. That's more than any other company in the S&P 500. And yet, its shares are down more than 9% in the year so far.

Similarly, Alphabet was the No. 2 biggest buyer of shares to the tune of $16.2 billion. And its shares are up less than 6% this year, lagging the S&P 500.

But that's where most of the large disconnect end. Seven of the 10 largest buyers of stock are beating the S&P 500 this year.

Meta's Buyback Bounce

Meta is the best example of a huge post buyback gain. Shares are up more than 40% this year. The company in the fourth quarter of 2023 ponied up $8.2 billion buying back its stock.

Meanwhile, defense contractor RTX paid $10.3 billion buying its shares in the fourth quarter. That ranks it No. 3 in the S&P 500. And its shares are up 11% this year.

Expect more buybacks if S&P 500 companies keep making money hand over fist, like they are now.

Biggest S&P 500 Buybacks

In the fourth quarter of 2023

Company Symbol Q4 2023 buyback ($ millions) YTD % ch.
Apple $22,730 -9.1%
Alphabet 16,191 5.9%
RTX 10,283 11.0%
General Motors 9,996 13.6%
Broadcom 8,290 11.1%
Meta Platforms 8,165 40.1%
Exxon Mobil 4,656 12.2%
Microsoft 4,000 11.4%
Visa 3,752 9.8%
Comcast 3,521 -1.9%
Sources: S&P Global Market Intelligence, IBD
Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.