Buoyed by an unquenchable thirst for short - term stock gains, traders and activist investors are mounting pressure on a wide array of companies to cut research and capital expenditures in order to
increase stock buybacks and thus boost stock prices.
Meanwhile, the automaker
increased its stock buyback program by $ 4 billion, bringing it to a total of $ 9 billion.
Following what will be one of its most profitable years ever in North America, General Motors raised its earnings guidance for 2016, while also dramatically
increasing its stock buyback program and its quarterly dividend.
Not exact matches
The firm said it would
increase its
stock -
buyback program for the first half of 2017 to $ 4.3 billion from $ 2.5 billion.
However, investors are reacting positively to two other pieces of news: Tims» dividend hike —
increased 23 %, or six cents a share to 32 cents — and a $ 440 million share
buyback, driving the
stock up 3 % in early trading.
Apple's shares gained 1.6 % in after - hours trading following the company's earnings release that included an announcement that it plans to expand
increase its dividend and
stock buyback plan yet again.
The math on
stock buybacks is pretty simple: by repurchasing your own company's
stock in the market you reduce the number of shares outstanding, thereby
increasing your earnings per share by cutting your denominator (earnings per share is calculated by dividing income by shares outstanding).
Buyback proponents say they reward these long - term shareholders by effectively
increasing their ownership of the company, and they help boost the value of a
stock by raising the company's earnings per share.
Apple also made investors happy announcing a 16 %
increase in its
stock dividend and a planned $ 100 billion share
buyback.
The tax cut and excess federal spending may boost some areas of the economy, but thus far, it has not produced anything more than a modest boost in capital spending (most of it from capital intensive technology companies) but a surge in
stock buybacks and dividend
increases, Apple being a case in point.
The company's Wednesday earnings release, in which Cisco announced a $ 25 billion
increase in its
stock buyback program and a dividend boost of 14 %, helped lead to a 6.7 % jump in its
stock price in after - hours trading.
Examples of such projects providing marginal benefits are: improving financial reporting systems through better information technology, minor tweaks to supply chain logistics, cutting back on marketing or
increasing low - cost advertising (like social media), «rationalization» of head count, holding average wages as low as possible, squeezing suppliers a little bit, not repatriating earnings to stave off taxation, refinancing rather than retiring debts, and the share
buyback that is insensitive to a company's current
stock price.
Companies in the S&P 500 are on track to give investors more than $ 1 trillion in
stock buybacks and dividend
increases this year, according to Howard Silverblatt, a senior analyst at S&P Dow...
«But if you look at hundreds of examples, you find that
stock buybacks do
increase long - term value.»
Investors should want companies to reinvest in themselves and their employees versus repurchasing their own
stock to
increase the share price, said William Lazonick, an economics professor at the University of Massachusetts, Lowell, who studies
stock buybacks.
Apple has called the idea «creative» and says it continues to study it, along with the notion of
increasing the size of its dividends and
stock buyback programs.
Earlier this year, under investor pressure, Apple decided to
increase the size of a dividend - and -
buyback program to $ 100 billion, including $ 60 billion to repurchase
stock through 2015.
Investor activist Carl Icahn has submitted an advisory proposal asking Apple to
increase the size of its
stock buyback program in 2014 to $ 50 billion.
This year, Apple
increased the size of its dividend and
stock buyback program to $ 100 billion.
Remember that the key justification for not paying dividends was that the earnings were being retained for
stock buybacks and
increases in book value for the benefit of shareholders.
During their earnings call on May 1st, Apple announced a $ 100B
stock buyback program plus a 16 % dividend
increase payable in May.
And although the company announced a record
stock buyback program earlier this year, Icahn would like to see it
increased even more.
Aflac also announced a 5.4 %
increase in their quarterly dividend to $ 0.39 a share and
increased the size of their
buyback plan from $ 1 billion to $ 1.2 billion which I like since it shows management is being smart when it comes to buying back
stock on cheap valuations.
As a result, we think they have room to
increase dividends and
stock buybacks as earnings improve and capital is freed up.»
Announced a 5 million share
increase to their
buyback program, bringing their total authorized
buyback plan to 10 million shares which will retire about 10 % of the company's outstanding
stock if fully executed.
The telecom company continued to show solid share - net growth in the December quarter, supported by
stock buybacks, good cost management, wireless margin improvement, and
increased penetration of U-verse, its broadband, video, and IP telephone service.
Thanks to hefty
stock buybacks, earnings per share did even better,
increasing 350 percent.
At such a cheap valuation, VIAB can use its $ 3 billion in annual free cash flow to
buyback stock, retiring shares at a undervalued price, thereby
increasing the overall value for remaining shareholders.
Some analysts predict the company could send as much as $ 180 billion to investors through
stock buybacks and dividend
increases over the next two and a half years, on top of the $ 300 billion it has already authorized.
By providing a lift to a
stock's price,
buybacks can
increase total shareholder return to target levels, resulting in more
stock awards for executives.
The
increase is due in large part to Apple's increasingly aggressive
stock buyback program.
The company traditionally makes a dividend
increase announcement at this time of year, and some believe that some of the billions in repatriated cash could go back to investors in the form of dividends or
stock buybacks.
The company recently announced an $ 8.6 billion (1 % of market cap)
stock buyback program, and it would not be surprising to see that number
increase significantly in the near future.
As long as companies see their valuations at elevated levels,
stock buybacks should not
increase.
Generally VOD uses their FCF to
increase their dividends,
buyback their own
stock, acquire other companies, or pay down debt
As for
stock buybacks, more than $ 136 billion was repurchased by S&P 500 companies in the fourth quarter, an
increase of 5.2 percent year - over-year.
There has been a lot of commentary around the historically high levels of share repurchases, and if its not the
increase in
stock - based compensation, what is the reason for the
increase in
buyback programs?
I agree that
buybacks at a high valuation are likely foolish, but
increasing the attractiveness of the
stock to those focused on the immediate payback would seem to make acquiring more shares at a good price more difficult.
Schumer read aloud quotes from CEOs saying they would plow corporate tax cuts into
stock buybacks and other such expenditures aimed at
increasing the value of shares (and potentially CEO bonuses), with no mention of jobs.
These banks are now able to move forward with their plans to return cash to shareholders, either in the form of
stock buybacks or
increasing dividends.
Do a share
buyback, which should
increase the
stock price over time.
As the first quarter earnings announcements wind down, new dividend
increases, plus
stock buybacks and new acquisitions have put a strong foundation under many
stocks.
There is no discussion by G&D of
stock buybacks as a method of enhancing a common
stock's market price over the long run, giving the management the flexibility to retain cash in troubled times, and also
increasing the percentage ownership interest of each non-selling stockholder.
With the reduction in both corporate and repatriation taxes, we expect an
increase in acquisition activity,
stock buybacks and dividend hikes over the course of the next 12 to 18 months.
«Most of those savings are going to be used for
stock buyback programs and
increased dividends, both of which will enhance shareholder value.»
The share
buyback to repurchase $ 2M of its
stock will
increase the per share liquidation value by around 6 % to $ 1.64.
The impact of a $ 2M
stock buyback at Friday's closing price is to
increase per share liquidation value by around 6 % to $ 1.64 and leaves the company with $ 26.3 M in cash and short term investments.
Investors that were waiting for Apple's announcement this week weren't disappointed — the consumer electronics behemoth announced a 16 % dividend
increase and a $ 100 billion
stock buyback.
During their earnings call on May 1st, Apple announced a $ 100B
stock buyback program plus a 16 % dividend
increase payable in May.
In my mind, the
stock was completely neglected, the far higher NAV was also being ignored by investors, and there was a fair chance further share
buybacks might actually prompt investor selling, based on an
increasing inside ownership stake.