S&P 500 Q1 Buybacks Jump 12%

by: SA News Team

S&P published the following press release:

S&P 500 Q1 2016 stock buybacks, or share repurchases, increased 12% to $161.4 billion, up from the $144.1 billion reported in Q1 2015. Q1 2016 was the second largest expenditure on record, following the $172 billion spent in Q3 2007.

For the 12-months ending in March 2016, S&P 500 issues spent $589.4 billion on buybacks, up 9.5% from the $538.1 billion spent in the same period of 2015. The 12-month expenditure set a new S&P 500 record, replacing the $589.1 billion spent in 2007.

Quarter-over-quarter comparison shows that the $161.4 billion spent on share repurchases in Q1 2016 is a 10.6% from the $145.9 billion posted in Q4 2015.

Historical S&P 500 buyback data can be found at: www.spdji.com/indices/equity/sp-500.

According to S&P Dow Jones Indices:

  • The $161.4 billion spent in Q1 2016 represents a 10.6% increase from Q4 2015 and a 12% increase from Q1 2015.
  • For the 12-month period ending March 2016, S&P 500 issues increased their buyback expenditures by 9.5%, to $589.4 billion, up from $538.1 billion posted for the corresponding 2015 period, setting a new 12-month record, replacing the record set in December 2007 ($589.1 billion).
  • The Health care sector increased 86.1% to $30.6 billion for the quarter, up from the prior quarter's $16.5 billion, as Gilead Sciences (NASDAQ:GILD) spent $8 billion (ranking as the 18th largest in S&P 500 history).
  • The Energy sector conducted only minor buybacks ($2.1 billion), as it posted a 20.6% decline for the quarter and a 62.9% decline from Q1 2015.
  • For the ninth consecutive quarter, more than 20% of the S&P 500 issues reduced their year-over-year diluted share count by at least 4%, therefore boosting their earnings-per-share (NYSEARCA:EPS) by at least 4%. The participation rate for significant EPS impact rose to 28.2% for Q1 2016, up from 25.8% in Q4 2015.
  • Total shareholder return, dividends plus buybacks, set a quarterly record of $257.6 billion in Q1 2016 and a 12-month record of $974.6 billion for the period ending in March 2016.

"The Q4 2015 uptick in buybacks was a surprise to many in the market, but it continued in Q1 2016," said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices. "The pace of buybacks was partially driven by companies supporting their stock during the opening downturn of the year, which coincidentally started in early February when many earnings lock-ups ended. The upswing in both expenditures and participation appears to persist in the market, meaning that the upturn in Q4 was not a single-shot. Looking at Q2 2016, the share count reduction trend is already baked in, as more than 20% of the issues have reduced their share count by at least 4% from Q2 2015."

Additionally, S&P Dow Jones Indices' data shows:

  • Issues reducing their share count this quarter increased to 334 from 318 in Q4 2015 and 299 in Q1 2015.
  • Significant changes (generally considered 1% or greater for the quarter) remained strong, as 147 issues reduced their share count by at least 1%, compared to 152 in Q4 2015 and 116 in Q1 2015.
  • Year-over-year share count reduction (impacts of at least 4%) increased for the fifth consecutive quarter, to 139, up from 120 in Q4 2015 and 104 in Q1 2015.

Total Shareholder Returns:

Silverblatt notes that total shareholder return through regular cash dividends, as well as buybacks, set a record quarter at $257.6 billion, up from the previous record of $245.3 billion, which was set in Q4 2015. Dividends, which had posted seven consecutive quarters of record payments, declined in Q1 2016, as energy dividend cuts pulled the aggregate down. For the 12-month period ending March 2016, companies returned a record $974.6 billion in buybacks and dividends to investors, marking its fourth consecutive record and surpassing the prior record (annual or 12-months) of $954.6 billion, set in Q4 2015.

According to Silverblatt, cash reserves also set a new record, increasing 1.6%, as S&P 500 Industrial (Old) available cash and equivalent now stands at $1.347 trillion, up 1.1% from the prior record $1.333 trillion set at the end of 2014. Silverblatt adds that the current cash level is 86 weeks of expected 2016 operating income, giving corporations leeway in their expenditures.

"Shareholder returns continue to increase, as companies remain awash with cash and have access to low-cost financing – especially in Europe and Asia," said Silverblatt. "The rate of dividend increases has slowed, as commodity-based issues remain a major uncertainty. Given the current cash-flow, projections, and an expected slow and measured pace of interest rate increases in the U.S. by the FOMC, companies have the ability to increase returns, as they remain under continued pressure from outside investors."

Sectors:

Information Technology continued to dominate buybacks (and cash holdings), even as their percentage of Q1 S&P 500 buybacks decreased to 21.5% from 24.4% in Q4 2015. Energy continued to decline, falling to 1.3%, from 1.8% in Q4 2015 and 8.2% in Q1 2014. Health care increased 86.1%, accounting for 19% of all buybacks, up from 11.3% in Q4 2015 and 14.5% in Q1 2015. Also notable was Consumer Staples, which declined by 28.6% to $11.7 billion, down from $16.4 billion in Q4 2015.

For the quarter, Gilead Sciences (GILD) spent the most at $8 billion, up from their prior quarter's $3.1 billion, marking the 18th largest quarterly buyback by an S&P 500 constituent in history. Apple (NASDAQ:AAPL) was second, with $6.7 billion, slightly down from its prior quarter's $6.9 billion. General Electric (NYSE:GE) came in third with $6.3 billion, up from its prior quarter's $1.7 billion. Pfizer (NYSE:PFE) and McDonald's (NYSE:MCD) rounded out the top five, spending $5 billion and $4.3 billion, respectively. Exxon Mobil (NYSE:XOM) ranked 58th, down from last quarter's ranking of 53rd, with $0.73 billion, continuing its retreat from the $3.9 billion it spent in the Q1 2014 when oil was averaging $100/barrel.

For more information about S&P Dow Jones Indices, please visit www.spdji.com

S&P Dow Jones Indices

S&P 500, $ U.S. BILLIONS (preliminary in bold)

PERIOD

OPERATING

AS REPORTED

DIVIDEND &

DIVIDENDS

EARNINGS

EARNINGS

DIVIDENDS

BUYBACKS

DIVIDEND

BUYBACK

BUYBACK

& BUYBACKS

$ BILLIONS

$ BILLIONS

$ BILLIONS

$ BILLIONS

YIELD

YIELD

YIELD

$ BILLION

12 Mo Mar,'16

$865.92

$758.80

$385.17

$589.41

2.16%

3.30%

5.46%

$974.58

12 Mo Mar,'15

$989.00

$880.32

$362.02

$538.13

2.03%

3.01%

5.04%

$954.62

2015

$885.38

$762.74

$382.46

$572.16

2.13%

3.19%

5.33%

$954.62

2014

$1,004.22

$909.09

$350.43

$553.28

2.03%

3.20%

5.23%

$903.71

2013

$956.01

$892.76

$311.77

$475.59

2.09%

3.18%

5.27%

$787.36

(mkt val avg)

3/31/2016 Prelim.

$208.99

$189.11

$96.26

$161.39

2.14%

3.28%

5.43%

$257.65

12/31/2015

$201.95

$163.76

$99.39

$145.88

2.14%

3.20%

5.33%

$245.27

9/30/2015

$224.14

$204.58

$95.07

$150.58

2.22%

3.30%

5.53%

$245.66

6/30/2015

$230.84

$201.35

$94.45

$131.56

2.03%

3.04%

5.07%

$226.01

3/31/2015

$228.45

$193.05

$93.55

$144.13

1.98%

2.94%

4.92%

$237.69

12/30/2014

$237.14

$202.31

$92.80

$132.63

1.92%

3.03%

4.95%

$225.43

9/30/2014

$262.92

$244.00

$89.02

$145.19

1.96%

3.14%

5.10%

$234.22

6/30/2014

$260.50

$240.96

$86.65

$116.17

1.91%

3.06%

4.98%

$202.82

3/31/2014

$243.67

$221.82

$81.96

$159.28

1.93%

3.20%

5.14%

$241.24

12/31/2013

$252.10

$236.31

$84.98

$129.41

1.89%

2.88%

4.77%

$214.40

9/30/2013

$239.50

$219.13

$79.26

$128.16

2.05%

2.98%

5.03%

$207.42

6/30/2013

$234.84

$221.56

$76.67

$118.05

2.07%

2.94%

5.02%

$194.72

3/31/2013

$229.57

$215.76

$70.86

$99.97

2.06%

2.97%

5.02%

$170.82

12/31/2012

$206.84

$184.50

$79.83

$99.15

2.20%

3.13%

5.33%

$178.98

9/30/2012

$214.58

$189.64

$69.48

$103.72

2.07%

3.01%

5.08%

$173.20

6/30/2012

$229.69

$195.27

$67.31

$111.75

2.08%

3.27%

5.35%

$179.05

3/31/2012

$219.09

$208.15

$64.07

$84.29

1.95%

3.14%

5.09%

$148.37

12/31/2011

$214.83

$186.85

$65.89

$87.59

2.11%

3.56%

5.67%

$153.47

S&P Dow Jones Indices

S&P 500 SECTOR BUYBACKS

SECTOR $ MILLIONS

Q1,'16

Q4,'15

Q1,'15

12MoMar,'16

12MoMar,'15

5-YEARS

2007 YR

Q2,'09

(high)

(low)

Consumer Discretionary

$26,671

$22,949

$19,230

$99,480

$82,367

$389,541

$80,435

$2,350

Consumer Staples

$11,708

$16,394

$10,873

$45,725

$41,190

$225,015

$51,589

$4,013

Energy

$2,053

$2,587

$5,538

$11,765

$33,375

$170,590

$67,031

$5,343

Financials

$26,706

$25,018

$22,526

$98,737

$79,668

$345,542

$107,328

$1,170

Healthcare

$30,626

$16,457

$20,897

$80,049

$65,152

$338,668

$63,775

$4,699

Industrials

$26,229

$19,827

$20,124

$86,218

$64,818

$291,210

$54,806

$1,681

Information Technology

$34,682

$35,516

$34,976

$150,033

$140,497

$602,871

$121,974

$4,757

Materials

$2,402

$6,332

$4,397

$13,526

$24,043

$67,775

$13,586

$159

Telecommunication Services

$12

$547

$5,185

$1,049

$5,887

$36,485

$17,627

$13

Utilities

$296

$253

$386

$2,830

$1,134

$8,860

$10,963

$10

TOTAL

$161,385

$145,881

$144,133

$589,411

$538,131

$2,476,557

$589,113

$24,195

S&P Dow Jones Indices

S&P 500 20 LARGEST Q1 2016 BUYBACKS, $ MILLIONS

Company

Ticker

Sector

Q1,'16

12 Mo Mar,'16

12 Mo Mar,'15

5-Year

10-year

Indicated

Buybacks

Buybacks

Buybacks

Buybacks

Buybacks

Dividend

$ Million

$ Million

$ Million

$ Million

$ Million

$ Million

Gilead Sciences

GILD

Healthcare

$8,000

$14,101

$7,900

$25,535

$34,107

$2,570

Apple

AAPL

Information Technology

$6,667

$36,783

$34,000

$116,643

$116,645

$12,642

General Electric

GE

Industrials

$6,326

$8,060

$44

$25,732

$54,020

$8,584

Pfizer

PFE

Healthcare

$5,000

$5,160

$8,480

$44,815

$60,751

$7,258

McDonald's

MCD

Consumer Discretionary

$4,312

$9,805

$3,366

$19,995

$35,859

$3,210

Microsoft

MSFT

Information Technology

$3,857

$16,571

$11,334

$45,696

$120,706

$11,389

Boeing

BA

Industrials

$3,501

$7,752

$6,001

$18,054

$24,666

$2,889

American International Gr

AIG

Financials

$3,486

$12,779

$5,433

$32,746

$39,780

$1,471

Express Scripts Holding

ESRX

Healthcare

$3,109

$8,609

$3,875

$19,673

$23,491

$0

Wal-Mart Stores

WMT

Consumer Staples

$2,735

$6,567

$669

$23,246

$55,012

$6,404

Johnson & Johnson

JNJ

Healthcare

$2,389

$5,481

$8,548

$33,350

$55,048

$8,830

Oracle

ORCL

Information Technology

$2,214

$10,557

$8,062

$43,748

$57,164

$2,521

Alphabet

GOOGL

Information Technology

$2,098

$3,878

$0

$3,994

$4,806

$0

CVS Health

CVS

Consumer Staples

$2,066

$5,060

$4,007

$20,260

$30,097

$1,867

Walt Disney

DIS

Consumer Discretionary

$2,039

$8,698

$5,061

$27,506

$46,133

$2,317

Wells Fargo

WFC

Financials

$2,029

$8,134

$10,981

$31,775

$42,501

$7,717

Visa

V

Information Technology

$1,754

$4,907

$3,872

$18,699

$36,327

$1,075

JPMorgan

JPM

Financials

$1,696

$5,412

$6,274

$27,282

$40,256

$7,047

Citigroup

C

Financials

$1,620

$6,784

$1,594

$10,739

$17,954

$590

Goldman Sachs Group

GS

Financials

$1,556

$4,441

$5,000

$26,542

$48,438

$1,098

Top 20

$66,454

$189,539

$134,501

$616,030

$943,761

$89,477

S&P 500

$161,385

$589,411

$538,131

$2,476,557

$4,263,262

$410,752

Top 20 % of S&P 500

41.18%

32.16%

24.99%

24.87%

22.14%

21.78%

Gross values are not adjusted for float

S&P Dow Jones Indices

S&P 500 Q1 2016 Buyback Report

SECTOR

DIVIDEND

BUYBACK

COMBINED

YIELD

YIELD

YIELD

Consumer Staples

2.99%

2.41%

5.39%

Energy

2.94%

0.92%

3.86%

Financials

2.36%

3.47%

5.83%

HealthCare

1.77%

3.03%

4.80%

Industrials

2.38%

4.71%

7.09%

Information Technology

1.84%

4.35%

6.20%

Materials

2.32%

2.90%

5.22%

Telecommunication Services

4.52%

0.21%

4.72%

Utilities

3.43%

0.46%

3.88%

S&P 500

2.30%

3.32%

5.62%

Uses full values (unadjusted for float)

Dividends based on indicated; buybacks based on the last 12-months ending Q1,'16