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 company’s business. If you recommend individual stocks for your clients, or advise them about existing stock holdings, you should take a close look at a company’s 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

Don't have an account? Register for Free Unlimited Access