Companies bought back a record-breaking $850 billion worth of shares in 2021, and are planning even more buybacks in 2022. Mark Maurer reports in The Wall Street Journal:
Sitting atop a haul of strong earnings, companies are planning to spend even more in 2022 on share buybacks and dividends, a trend finance executives don’t expect to slow despite a proposed 1% excise tax on repurchases.
Many companies have bounced back from the blow dealt by the coronavirus pandemic and are in a period of hale growth, giving them ample leeway to reward their shareholders, said Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices, a unit of S&P Global Inc.
“Most of the companies have significant cash-flow positions right now,” he said. “There’s enough cash to do almost anything.”
Companies in the S&P 500 held $3.78 trillion in cash and cash equivalents at the end of the third quarter, up from $3.41 trillion a year before and $2.19 trillion from the 2019 period, according to data provider S&P Global Market Intelligence.
For the year about to close, share repurchases at companies in the S&P 500 are expected to have hit an estimated record of $850 billion, up 63.6% from last year, when many companies temporarily paused those programs, and 16.6% from 2019.
In the third quarter of this year, buybacks topped $234.6 billion, exceeding the previous $223 billion record, set in the fourth quarter of 2018.
Companies paid out cash dividends averaging $15.36 a share in the third quarter, also a peak, up from $13.97 in the prior-year quarter, the data show.
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