Preliminary buyback data released by Standard and Poor's indicates S&P 500 companies bought back $109 billion of their stock in the second quarter. This is the first time buybacks have exceeded $100 billion since the first quarter of 2008 when buybacks totaled $113 billion. On a year over year basis, the Q2 buyback amount was 41% higher than the buyback total in Q2 2010.
Howard Silverblatt of S&P notes,
Silverblatt goes on to note,
"At this point, companies are continuing to use buybacks to prevent earnings dilution from employee options, as well as shares used for dividend reinvestment programs. Few companies are venturing outside of the box to purchase additional shares, as was the common practice from late 2005 through mid-2007."
"Exxon Mobil's buybacks have reduced its share count by 18.5% over the past five years ($129 billion), which may cost it its position as the largest company in the world."
|From The Blog of HORAN Capital Advisors|
Data source: Standard & Poor's
Interestingly, as the box in the chart details, the cumulative earnings generated by the companies in the S&P 500 Index since 2001 have been returned to shareholders either in the form of a dividend or stock buybacks.