Companies in the S&P 500 spent $145 billion on buybacks in the third quarter of 2014, according to preliminary numbers from S&P Dow Jones Indexes. That's up about 13% from the same period a year earlier. It's also considerably more than companies spent on dividends, which accounted for $89 billion in the same time period.
Many investors are bullish on buybacks. After all, they boost per-share earnings, which often results in an increase in the stock price. What's not to like? Well, for one, buybacks can sometimes mask unpleasant truths about a companys business. If you recommend individual stocks for your clients, or advise them about existing stock holdings, you should take a close look at a companys buyback program.
Register or login for access to this item and much more
All Bank Investment Consultant content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access