This week I will run you through the most important buyback announcements for the week of 4 March till 9 March.
While consumers and governments across the world are strapped for cash, corporations have plenty. Rather than signal long-term trust and pay more generous long-term oriented dividends, many of them have adopted share repurchases to buy back their own stocks. Investors welcome these announcements as they boost earnings per share and provide a lot of support for the share price during the repurchase periods.
AutoZone (AZO) announced an additional $750 million repurchase program, enough to retire 5.0% of outstanding shares. The retailer and distributor of automotive replacement parts and accessories made the announcement after shares trade at an all time high of $380.
Investors it AutoZone do not receive dividends, but have seen their shares increase in value by some 150% over the last two years.
Dick's Sporting Goods (DKS) announced a new $200 million repurchase program 3.5%. The sporting goods retailer plans to offset dilution caused by employee-incentive programs and buys back the shares around an all time high of $47 per share. On top of the compensation for dilution, Dick's pays a 1.0% dividend yield.
Qualcomm (QCOM) the manufacturer of digital wireless and integrated circuit products announced a $4 billion repurchase program and simultaneously raised its quarterly dividend by 16% to a yield of 1.3%. The buyback announcements comes at a time when shares trade around all time high of $64. The main goal of the plan is an attempt to offset dilution caused by employee incentive plans.
Dice Holdings (DHX) the smaller online career website and career fair company announced a $65 million repurchase plan, enough to retire 10.2% of outstanding shares. This announcement is made after shares have roughly halved from $18 in 2011 to $10 at the moment. The new plan comes as a replacement of the old plan and is welcomed by investors who do not receive any dividends at the moment.
The Children's Place Retail Stores (PLCE) The North American children specialty retailer announced a $50 million repurchase program, sufficient to retire 3.9% of outstanding shares. The retailer which does not pay dividends has already retired some 20% of outstanding shares over the last couple of years.
During the last week, these five companies described above announced repurchase plans totaling $5 billion, which is roughly three times their combined annual dividend payment, which came in at around $1.6 billion.
Cash rich companies still refuse to significantly raise long-term dividends, which could send a powerful long-term trust signal. Rather, they use one-time repurchase agreements with far less signaling power as a dispersion tool of excess cash to their shareholders.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.