This week, I will run you through the most important buyback announcements for the week of 25 March till 30 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 stock. Investors welcome these announcements as they boost earnings per share and provide a lot of support for the share price during the repurchase periods.
American Express (AXP) announced a $150 million repurchase program, sufficient to retire a mere 0.2% of its outstanding shares. The global payment service provider known from its credit cards initiated the program to offset dilution from employee incentive plans. Fortunately for shareholders the company simultaneously announced an 11% increase in its quarterly dividend to $0.20 for an annual yield of 1.4%
Krispy Kreme Doughnuts (KKD) the small retailer focusing on doughnuts and other sweets announced a modest $20 million repurchase program, sufficient to retire 4.0% of its outstanding shares. The announcement is made as the company has recovered from harsh times, as is back on its feet again. The company currently does not pay a dividend.
TIBCO Software (TIBX) announced a $300 million additional repurchase program enough to retire 5.9% of outstanding shares. The provider of middleware and infrastructure software made the announcement after shares hit all time highs in the low thirties.
The buyback is welcomed by investors who receive no dividends.
Red Hat (RHT) announced a $300 million additional repurchase program, enough to retire some 2.6% of its outstanding shares. The open source software provider known from "Linux" made the announcement after shares have risen some 15% this week as the company published a favorable earnings report. Over the last four years the company has already retired some 7% of its outstanding shares. Currently the company does not pay a dividend.
During the last week, these four companies described above announced repurchase plans totaling $800 million, which makes this week a really quiet week in terms of buyback activity.
Cash-rich companies still refuse to significantly raise long-term dividends. 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.