Market Overview

S&P 500 buybacks decline significantly in Q2 2019; expenditures still remain higher than the pre-2018 levels

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NEW YORK, Sept. 16, 2019 /PRNewswire/ -- S&P Dow Jones Indices ("S&P DJI") announced today that preliminary Q2 2019 S&P 500® stock buybacks, or share repurchases, were $164.5 billion. This was the second consecutive quarterly decline after four consecutive quarters of record buybacks. Q2 2019 buybacks were 20.1% lower than Q1 2019's $205.6 billion, 13.7% lower year-over-year from Q2 2018's $190.6 billion, and 26.2% lower than the Q4 2018 record expenditure of $223.0 billion.  

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

Key Takeaways:

  • While companies significantly reduced their Q2 2019 buyback expenditures from the record setting quarters of 2018, levels remain higher than 2017 and prior periods.
    • The 2018 tax rate decline may have pushed companies to overspend on buybacks, posting a 55% gain over 2017 and a 39% gain over the prior record in 2015.
  • The cumulative rolling four quarters of repurchases continued to impact EPS as 24.2% of the issues reduced share counts by at least 4% year-over-year, slightly down from the Q1 2019 24.9% rate, and substantially up from the Q2 2018's 15.6%, giving 1-in-4 issues at least a 4% EPS tailwind.
  • S&P 500 Q2 2019 dividends totaled $118.7 billion, up 6.3% from the Q2 2018 of $111.6 billion; Q3 2019 is set to post a new record, in the $122 billion range.
  • Total shareholder return of buybacks and dividends for the quarter came in at $283.2 billion, down 12.4% from the Q1 2019 period expenditure of $323.1 billion and down 6.3% from the $302.2 billion reported for Q2 2018.
  • Total shareholder return for the 12-month period ending June 2019 declined to $1.269 trillion, from the record 12-month March 2019 level of $1.288 trillion, and was up 17.3% from the year-over-year 12-month Q2 2018 of $1.081 trillion.

"In what may have been a reaction to their tax-inspired record-setting buying spree of 2018, companies significantly pulled back on their Q2 2019 buybacks, said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.  "While the decline is significant compared to 2018, it remains higher than the pre-2018 levels. Estimates vary, but a base amount of $170 billion a quarter has been emerging as the consensus level of buybacks going forward."

Silverblatt also found that buybacks continue to be top heavy, with the top 20 issues accounting for 51.4% of the buybacks, up a tick from the Q1 2019 51.2%, as the 10-year average is 44.1%. 

Q2 2019 GICS® Sector Analysis:

Information Technology buybacks continued to dominate, even as they decreased 20.3% to $54.2 billion compared to $68.0 billion for Q1 2019. Twelve-month expenditures were up 33.8% to $265.8 billion from $198.7 billion spent for the same period in 2018. The sector represents 33.0% of the index's buybacks for the quarter, flat from last quarter.

Materials buyback declined 49.3% to $2.4 billion compared to $4.8 billion for Q1 2018. Utilities declined 40.4%, to 0.9 billion from 1.5 billion in Q1 2019.

Health Care buybacks continued to be volatile, as they decreased 44.5% to $17.1 billion, down from $30.7 billion for Q1 2019, as the 12-months ending in Q2 2019, buybacks were $93.6 billion, up 6.1% from the $88.2 billion spent in the corresponding 2018 period. 

Issues:

The five issues with the highest total buybacks for Q2 2019 are:

  • Apple (AAPL) again led in buybacks spending $18.2 billion in Q2 2018, ranking 6th in S&P 500 history, as the level was down 23.8% from the record $23.8 billion spent in Q1 2019. Over the past 12-months, Apple has spent $71.4 billion on buybacks, almost twice the value of Ford Motor Company, up from $63.9 billion in the prior 12-month period.
  • Bank of America (BAC): $6.5 billion for Q2 2019, up from $6.3 billion for Q1 2019; in the last 12-months they spent $23.0 billion, up from $17.7 billion.
  • Oracle (ORCL): $6.3 billion for Q2 2019, down up from their $10.0 billion Q1 2019 expenditure; in the last 12 months they spent $36.6 billion, up from $11.9 billion.
  • JP Morgan (JPM): $5.2 billion for Q2 2019, up from the $5.1 billion spent in Q1 2019; in the last 12-months they spent $20.6 billion, up from $19.2 billion.
  • Cisco Systems (CSCO): $4.9 billion for Q2 2019, down from $6.1 billion for Q1 2019; in the last 12-months they spent $21.6 billion, up from $18.3 billion.

For more information about S&P Dow Jones Indices, please visit www.spdji.com.   

S&P Dow Jones Indices








S&P 500, $ U.S. BILLIONS  (preliminary and estimates in bold)






PERIOD

MARKET

OPERATING

AS REPORTED





DIVIDEND &


VALUE

EARNINGS

EARNINGS

DIVIDENDS

BUYBACKS

DIVIDEND 

BUYBACK 

BUYBACK 


$ BILLIONS

$ BILLIONS

$ BILLIONS

$ BILLIONS

$ BILLIONS

YIELD

YIELD

YIELD

12 Mo Jun,'19 Prelim.

$24,423.49

$1,295.01

$1,132.67

$471.54

$797.03

1.93%

3.26%

5.19%

12 Mo Jun,'18

$23,036.32

$1,196.08

$1,043.63

$435.69

$645.81

1.89%

2.80%

4.69%

2018

$21,026.90

$1,281.66

$1,119.43

$456.31

$806.41

2.17%

3.84%

6.01%

2017

$22,821.24

$1,066.00

$940.86

$419.77

$519.40

1.84%

2.28%

4.12%

2016

$19,267.93

$919.85

$818.55

$397.21

$536.38

2.06%

2.78%

4.85%










6/28/2019 Prelim

$24,423

$335.58

$291.25

$118.68

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