Want some good news? Buybacks are booming
some text ...
andAccording to Standard & Poor's, companies in the S&P 500 index repurchased a record $589-billion (U.S.) of their own shares in 2007. To put that into context, it's more than double the $246-billion they paid in dividends during the same period.
The amount of buybacks has been growing at a rapid clip, even as fewer companies raise their dividends and a growing number cut their payouts. The 2007 buyback total was 34.6 per cent higher than the $432-billion spent on buybacks in 2006 and 350 per cent higher than the $131-billion in 2001.
"Standard & Poor's expects buyback activity to continue at a high level for 2008, but not at a record-setting pace, as corporations and investors continue to be concerned" about economic and credit issues, said Howard Silverblatt, senior index analyst at Standard & Poor's.
Mergent's Buyback Achievers Index tracks the performance of U.S.-traded companies that have repurchased 5 per cent or more of their shares over the previous 12 months. The index trails the S&P 500 this year (down 11.6 per cent through March 31, compared with a 5.1-per-cent drop for the S&P 500), but over the previous five years it's posted an average annualized return of 16.5 per cent, compared with 11.3 per cent for the S&P 500.