S&P 500 companies pay total of $241 bn in repurchases and dividends, beating 2007 record
Combined share buybacks and dividend payouts among S&P 500 companies rose to a record in the first quarter as companies sought to meet increasing shareholder calls for higher returns, according to S&P Dow Jones Indices.
Stock repurchases and dividend payments climbed to a combined total of $241 bn in the first three months of the year, beating the record of $233 bn set in the fourth quarter of 2007, S&P Dow Jones Indices says in a press release.
Stock repurchases climbed 59 percent year on year to $159.3 bn in the first quarter of 2014 from $100 bn in the same quarter last year, the company says. Meanwhile, 346 of the 404 companies that reported buybacks over the past year also paid cash dividends, with 217 of them spending more on buybacks than on dividends.
‘Companies reached into their deep pockets this quarter and spent $30 bn more than in the prior quarter on buybacks, buying more than they issued and reducing their share count,’ says Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. ‘The lower share count pushed up earnings per share significantly (defined as a 4 percent impact) for 99 issues in the S&P 500, with the Q1 poster child being Apple.’
Apple led buybacks in the first quarter, spending a total of $18 bn, beating its own previous record of $16 bn, set in the second quarter of last year, S&P Dow Jones Indices says. With the buyback, Apple lowered its average diluted shares by 7 percent year on year for a 15.2 percent increase in earnings per share.
Silverblatt says 290 companies reduced their overall share count in the first quarter, compared with 276 companies during the same period last year. The number of companies that posted a change in share count of 4 percent or more rose to 99 from 83 at the same time.
‘It’s not just what you buy, but also what you issue,’ Silverblatt says. ‘This quarter companies decided to buy more. The key question for Q2 is: did they do it to boost a poor Q1 earnings period that was affected by weather conditions, or was it a shift toward more enhanced earnings via share count reduction, similar to what we experienced in 2006 and 2007?’
