S&P 500 buybacks reverse declines in Q3 2019; expenditures remain lower than the 2018 levels

NEW YORK, Dec. 17, 2019

Historical data on S&P 500 buybacks are available at www.spdji.com/indices/equity/sp-500. 

Key Takeaways:

• Companies reversed declines in buyback expenditures in the past two quarters of this year, posting a 6.3% gain over Q2 2019, as the current level remains significantly higher than 2017 and prior periods. The cumulative rolling four quarters of repurchases continued to impact EPS, as 22.8% of the issues reduced share counts by at least 4% year-over-year, the same level as Q2 2019, but up from the Q3 2018's 17.7%. Over 1-in-5 issues saw at least a 4% EPS tailwind and at this point 14.6% of the issues already have at least a 4% tailwind built into Q4 2019.
• S&P 500 Q3 2019 dividends set a quarterly record, increasing to $123.2 billion, up 6.4% from the Q3 2018 $115.7 billion; Q4 2019 is set to post yet another record, in the $126 billion range.
• Total shareholder return of buybacks and dividends for the quarter came in at $299.0 billion, up 5.2% from the Q2 2019 period expenditure of $284.1 billion and down 6.4% from the $319.5 billion reported for Q3 2018.
• Total shareholder return for the 12-month period ending September 2019 declined to $1.249 trillion from the 12-month June 2019 level of $1.270 trillion, and was up 7.1% from the year-over-year 12-month Q2 2018 level of $1.166 trillion.

"After lowering expenditures in the first half of the year from their tax-inspired record-setting buying spree of 2018, companies increased their share repurchases by 6.3% in the third quarter," said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.  "While the levels still pale in comparison to 2018, they are significantly higher than the pre-2018 levels, and surpass the hoped for $170 billion mark, which was seen as the level needed to support stocks and continue reduced share count EPS growth. For Q4, the market is looking for another increase in buybacks, in the mid-single digit range, staying near the $190 billion level, well shy of the Q4 2018 record-setting $223 billion."

Silverblatt also found that buybacks continue to be top heavy, with the top 20 issues accounting for 50.4% of the buybacks, compared to the 10-year average of 44.5%. 

Q3 2019 GICS® Sector Analysis:

Information Technology buybacks continued to decline as a percentage of all buybacks, as they decreased 10.8% to $49.2 billion compared to $55.2 billion for Q2 2019. Twelve-month expenditures were down 7.6% to $233.7 billion from the $253.0 billion spent in the same period in 2018. The sector represents 28.0% of the index's buybacks, down from Q2 2019's 33.4% and 40.4% in Q3 2018.