Strong Rebound In Third Quarter 2014 Buybacks

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Includes: AAPL, AIG, HD, IBM, JNJ, RIG, XOM
by: David I. Templeton, CFA

After the second quarter's significant decline in buyback activity, S&P Dow Jones Indices preliminarily reports S&P 500 companies increased third quarter buybacks by 25%. Buybacks for the third quarter totaled $145.2 billion versus the $116.2 billion reported in the second quarter. Apple (NASDAQ:AAPL) holds the top three spots in record quarterly buybacks with the third quarter amounting to $17 billion. This is just short of the record level of $17.97 billion in the first quarter of this year held by Apple.

From The Blog of HORAN Capital Advisors


Source: S&P Dow Jones Indices (.xls)

This level of buyback activity has been a tailwind for earnings per share growth. Howard Silverblatt, Senior Index Analyst for S&P, notes,

  • While third quarter expenditures were up 25%, the number of companies reducing their share count declined 13%. Still, over half of the S&P 500 issues reduced their share count with 20% decreasing them enough to impact their year-over-year EPS by at least 4%.
  • ...companies continue to increase their total shareholders' returns through regular cash dividends, as well as buybacks. Over the year ended September 2014, buyback and dividend expenditures combined reached a new record high of $892.7 billion, with buybacks representing 62.0% of the total.
From The Blog of HORAN Capital Advisors
From The Blog of HORAN Capital Advisors

Silverblatt believes the forth quarter will also be a strong period for buyback activity.

Disclosure: Family Long AAPL