Investors were pleased as Apple (AAPL) announced it will pay a dividend of $2.65 per share quarterly for a yield of around 1.8% and repurchase up to $10 billion in stock. While this was good news, the $10 billion buyback is only 1.8% of its market capitalization. Many other companies that announced buybacks in 2012 are decreasing their market cap by double digits. These stocks also have a dividend yield higher than 2.0%, with more dividend growth in the years ahead. Here is a list of dividend stocks with big buybacks of 10% or more of their market cap.
Applied Materials, Inc. (AMAT) provides manufacturing equipment, services, and software to the semiconductor, flat panel display, solar photovoltaic [PV], and related industries worldwide. AMAT announced a $3.0 billion buyback that will be 18% of its market cap when completed. AMAT has a dividend yield of 2.81% and a 5-year annual dividend growth rate of 12.5%. AMAT has an equity summary score of 9.9 out of 10, for a very bullish outlook by analysts. The fundamentals for AMAT are indicative of a company with a strong financial base. The stock represents a good value when compared to other stocks in its industry group and appears likely to experience further price appreciation. AMAT's management is effectively managing its total resources to generate profits for the company when compared to industry averages. The company's finances are sound at this time, but it needs to be careful regarding its debt ratios. Operating margins are improving, and operating cash flow remains positive.
Safeway Inc. (SWY) operates as a food and drug retailer in North America. SWY announced a $1.0 billion buyback that will be 17% of its market cap when completed. SWY has a dividend yield of 2.68% and a 5-year annual dividend growth rate of 20.3%. Safeway's fourth quarter adjusted EPS of $0.67 exceeded the consensus estimate of $0.64, and the year-ago quarter EPS of $0.62. On the back of global economic turmoil and price competition, Safeway has been witnessing sluggish revenue growth in the past few quarters. Food inflation coupled with a weak employment scenario affected consumer spending. However, the positive ID store sales, strong sales by Blackhawk, remodeling and opening of stores resulted in an overall improvement. The company is also adopting several cost-saving initiatives. With solid cash balance Safeway rewards its shareholders through buybacks.
Time Warner Cable Inc. (TWC) operates as a cable operator in the United States. TWC has a $4.0 billion buyback that will be 16% of its market cap when completed. TWC has a dividend yield of 2.79%. TWC reported strong financial results for the fourth quarter of 2011, outpacing the consensus estimates. The company is gradually transforming itself as a leading broadband provider with a formidable video distribution network in its offerings. Recent acquisition of NeviSite and some of the cable systems of NewWave facilitated Time Warner Cable to increase its total ARPU by 4.2%. Although the company continues to lose video subscribers, the rate of subscriber loss actually declined by 64.5% year over year.
Marathon Petroleum (MPC) is one of the largest independent refiners and marketers of petroleum products in the U.S. This mid-2011 spinoff from Marathon Oil has operations focused on the Midwest and Gulf Coast regions. MPC announced a $2.0 billion buyback that will be 13% of its market cap when completed. MPC has a dividend yield of 2.24%. On February 1, 2012, the company announced that it was in the process of evaluating strategic alternatives in regards to its midstream assets, and is considering the possible formation and initial public offering of a master limited partnership.
Target Corporation (TGT) operates general merchandise stores in the United States. TGT has a $5.0 billion buyback that will be 12.8% of its market cap when completed. TGT has a dividend yield of 2.06% and a 5-year annual dividend growth rate of 20.1%. Target's efficient marketing, multi-channel strategy, product innovation, compelling pricing strategy, and new merchandise assortments, should help drive comparable-store sales and operating margins in the long term. We expect the company to gain market share, and believe that more focus on consumable items should boost sales and earnings in a sluggish consumer environment. The company's long term objective is to attain $100 billion or more in sales and $8.00 or more in earnings per share by 2017.
Comcast Corporation (CMCSA) provides entertainment, information, and communications products and services in the United States and internationally. The company's Cable Communications segment provides video, high-speed Internet, and voice services to residential and business customers. Comcast has a $6.5 billion buyback that will be 10.4% of its market cap when completed. CMCSA has a dividend yield of 2.2%. Comcast reported excellent financial results in the fourth quarter of 2011, easily beating the consensus estimates. While the company's Cable Communication segment continue to beat market expectations, NBC Universal has started providing synergies. Comcast's video subscriber churn became extremely low in the previous quarter, which was the most important news. The company recently launched a subscription-based video streaming service to significantly enhance its pay-TV offerings.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.