In this article, we discuss dividend stocks with the biggest buyback programs. You can skip our detailed analysis of buyback programs and dividend stocks, and go directly to read 5 Dividend Stocks with the Biggest Buyback Programs.
Share buybacks refer to the process by which a company repurchases its own shares from the open market. By repurchasing shares, a company can return excess cash to shareholders and optimize its capitalization. US companies have hesitated to buy back their own shares due to the Federal Reserve's efforts to combat inflation by increasing interest rates, leading to higher borrowing expenses. Bloomberg Intelligence reported that share buybacks have experienced a decline for five consecutive quarters following a peak in 2022. However, in one of our articles titled 11 Stocks with the Biggest Buyback, we highlighted that the resurgence of share buyback activity is becoming prominent. This is attributed to the Federal Reserve's potential readiness to reduce interest rates and an anticipated improvement in earnings growth forecasts. Investors are optimistic that, with these factors in play, more companies will utilize their recently freed-up capital by engaging in stock market investments. In addition, our coverage included information from a Wall Street Journal report citing VerityData's data, indicating that accelerated share repurchases (ASRs) were poised to achieve their second-highest quarterly performance since the onset of the COVID-19 pandemic.
This aligns with the latest report from S&P Dow Jones Indices, which noted that share repurchases in Q3 2023 amounted to $185.6 billion, marking a 6.1% increase compared to the $174.9 billion spent in the preceding quarter. Analysts express confidence in the potential for robust buyback activity throughout the current year. They believe that increased buyback activity could have positive implications for shareholder value, earnings per share, and overall market performance. Analysts at Deutsche Bank anticipate that even at their presently restrained rate, buybacks are expected to contribute to generating annual returns in the range of 7% to 8% for the S&P 500 index. In a research note dated January 12, strategists from the bank penned their insights or analysis. Here is what they say:
“The key reason buybacks remain subdued is the continued overhang of cyclical uncertainty with the consensus of economists steadfast in their forecast for a sharp and imminent slowdown. However, further increases in earnings as in our forecast should prompt increases in buybacks.”
Dividend companies in the US are actively participating in share buyback programs. While dividends involve distributing a portion of the company's profits to shareholders in cash, buybacks involve using company funds to repurchase its own outstanding shares from the market. Both mechanisms are ways for companies to return value to shareholders. Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Exxon Mobil Corporation (NYSE:XOM) are some of the best dividend stocks with the biggest buyback programs. They are highlighted alongside other noteworthy companies in the list below, all recognized for their strong combination of dividend payments and substantial share buybacks.
10 Dividend Stocks with the Biggest Buyback Programs
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Our Methodology:
In this article, we used a report by S&P Dow Jones Indices that gathered information on stock repurchases in 2022 and 2023. From this comprehensive report, we identified 10 dividend-paying companies that had the greatest dollar value of share buybacks in the 12 months leading up to September 2023. We also mentioned hedge fund sentiment data for these stocks where available. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Stock Buybacks in 12 Months Through September 2023:$7.24 Billion
Deere & Company (NYSE:DE) is an American company that operates in the agricultural, construction, forestry, and turf care industries. On December 6, 2023, the company declared a 9% hike in its quarterly dividend to $1.47 per share, which was its second dividend growth for the year. Moreover, it has been making regular dividend payments to shareholders since 1990. The stock has a dividend yield of 1.51%, as of January 24. In the past 12 months ending September 2023, the company carried out $7.24 billion worth of share buybacks, which makes DE one of the best dividend stocks with the biggest buyback programs.
At the end of Q3 2023, 55 hedge funds tracked by Insider Monkey reported having stakes in Deere & Company (NYSE:DE). compared with 56 in the previous quarter. The overall value of these stakes is more than $3.07 billion. With roughly 4 million shares, Bill & Melinda Gates Foundation Trust was the company's leading stakeholder in Q3.
Stock Buybacks in 12 Months Through September 2023:$7.57 Billion
Bristol-Myers Squibb Company (NYSE:BMY) is a global pharmaceutical company engaged in the discovery, development, and manufacturing of biopharmaceutical products. The company pays a quarterly dividend of $0.60 per share, having raised it by 5.3% in December 2023. This marked its 18th consecutive year of dividend growth. The stock has a dividend yield of 4.76%, as of January 24. It is one of the best dividend stocks with the biggest buybacks on our list.
Insider Monkey's database of Q3 2023 showed that 65 hedge funds owned stakes in Bristol-Myers Squibb Company (NYSE:BMY), compared with 66 in the previous quarter. These stakes have a collective value of over $1.8 billion. Among these hedge funds, Two Sigma Advisors was the company's leading stakeholder in Q3.
Madison Investments mentioned Bristol-Myers Squibb Company (NYSE:BMY) in its Q3 2023 investor letter. Here is what the firm has to say:
“During the quarter, we sold our positions in Bristol-Myers Squibb Company (NYSE:BMY) and The Walt Disney Company. We added Texas Instruments as a new position. Bristol-Myers has been dealing with the loss of exclusivity for Revlimid, one of its key products. Although the company is launching new drugs in melanoma, heart failure, and psoriasis it will need additional products to offset the lower revenue in Revlimid.”
Stock Buybacks in 12 Months Through September 2023:$7.6 Billion
JPMorgan Chase & Co. (NYSE:JPM) is next on our list of the best dividend stocks with the biggest buyback programs in the 12-month period ending September 2023. The American financial services company currently offers a quarterly dividend of $1.05 per share and has a dividend yield of 2.48%, as of January 24. In the most recent quarter, the company returned $3.1 billion to shareholders through dividends.
As of the close of Q3 2023, 109 hedge funds in Insider Monkey's database owned stakes in JPMorgan Chase & Co. (NYSE:JPM), growing from 106 in the preceding quarter. These stakes have a consolidated value of over $6.6 billion.
Vltava Fund mentioned JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2023 investor letter. Here is what the firm has to say:
“Last spring, the US went through a brief banking crisis that cost several smaller and medium-sized banks their lives. One of them, First Republic Bank, with assets of $230 billion, went into receivership and was bought out by the largest US bank, JPMorgan Chase & Co. (NYSE:JPM). The acquisition terms were very favourable for JPM and the facts that few, if any, other banks could have taken over the whole of First Republic Bank in its then-present state while guaranteeing more than $100 billion of its deposits played a role. JPM could do it. It is not only the largest, but also by its balance sheet the strongest US bank and, in our opinion, clearly the best managed. It has come out of this crisis even stronger. We have actively followed the banking sector for 20 years in many countries around the world. Our view is that a well-managed bank can be a very good long-term investment but that it is better to focus on the best and highest quality available. Banking is not a sector where it pays to trade quality for cheaper valuations. That is why we hold JPM.”
Stock Buybacks in 12 Months Through September 2023:$9.7 Billion
Mastercard Incorporated (NYSE:MA) is a global technology company that operates in the financial services industry, specializing in payment solutions. The company is a major player in the payment processing industry. On December 6, 2023, it declared a 16% increase in its quarterly dividend to $0.66 per share. Through this hike, the company achieved its 11th consecutive year of dividend growth. In addition to this, the board has given its approval for a fresh $11 billion share repurchase initiative, which makes MSFT one of the best dividend stocks with the biggest buyback programs. This program is set to take effect upon the conclusion of the company's previously disclosed $9 billion repurchase program.
As of the end of September 2023, 140 hedge funds tracked by Insider Monkey reported having stakes in Mastercard Incorporated (NYSE:MA), compared with 139 in the preceding quarter. These stakes are collectively valued at over $15.2 billion.
Stock Buybacks in 12 Months Through September 2023:$11.2 Billion
Comcast Corporation (NASDAQ:CMCSA) ranks sixth on our list of the best dividend stocks with the biggest buyback programs. The American multinational telecommunications company carried out share buybacks worth over $11.2 billion. It has been growing its dividends for the past 15 consecutive years and offers a quarterly dividend of $0.29 per share. The stock's dividend yield on January 24 came in at 2.64%.
The number of hedge funds tracked by Insider Monkey owning stakes in Comcast Corporation (NASDAQ:CMCSA) grew to 68 in Q3 2023, from 66 in the previous quarter. The total value of these stakes is over $3.6 billion. First Eagle Investment Management held nearly 40 million CMCSA shares in the third quarter, becoming the company's largest stakeholder.
