Buybacks Today Form A Larger Part of Aggregate Payouts – Part 2

Buybacks Today Form A Larger Part Of Aggregate Payouts - Part 2

This is the second part of a three-part series. 

In the U.S., publicly traded companies routinely reward shareholders with cash payouts. There are two types of common payout vehicles:

  • Cash dividend per share
  • Share repurchases

Dividend-focused research has been quite popular across the financial industry for a long time, but a lack of reliable data has led quantitative researchers to ignore the impact of buyback programs on stock returns. This is particularly notable given that buybacks represent a greater share of payouts than dividends. Visible Alpha’s data science team analyzed a novel dataset that captures both the buyback and dividends expectations, resulting in the first analysis of forward-looking total payout expectations.

Buybacks today form a larger part of aggregate payouts; they are also highly dispersed across firms. The figure below plots the distribution of share repurchase amounts in each quarter of 2021. The distribution is strikingly skewed; of 859 companies that repurchased shares in 2021, the top 10 companies that spent at least 10 billion dollars make up more than 40% of all money spent on buybacks in 2021. The next group of 109 companies that spent at least one billion dollars, when combined with the top 10, collectively make 80+% of all money spent on buybacks in 2021. This is a staggering 5% of the firms generate 80% of all buybacks in 2021.

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 Download the full white paper here >

Register For a Live Presentation

Ihsan Saraçgil, Senior Principal Data Scientist at Visible Alpha, will present on the data, methodology, and key findings of the analysis during a webinar presentation on July 12, 2022. Register Now >

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Visible Alpha enhances the investment research process by extracting meaningful value from key sell-side assets, including analyst models, research reports and corporate access events through partnerships with the world’s premier investment research organizations. Our deep consensus data provides granular and timely insights into the sell-side view of companies, industries and peer groups. For more information, visit visiblealpha.com.