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S&P 500 stock buybacks drop 13.7% YOY in Q2

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S&P 500 stock buybacks drop 13.7% YOY in Q2

Share repurchases by S&P 500 companies declined 13.7% year over year in the second quarter following a tax-cut-driven record splurge in 2018, according to latest data from S&P Dow Jones Indices.

Companies bought back $164.48 billion of their own stock in the second quarter, down from $190.62 billion in the prior-year period.

Second-quarter buybacks were also lower than those in the first quarter of 2019 and fourth quarter of 2018, which came in at $205.81 billion and at a record $222.98 billion, respectively.

"In what may have been a reaction to their tax-inspired record-setting buying spree of 2018, companies significantly pulled back on their Q2 2019 buybacks," said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Silverblatt said the emerging consensus level of buybacks going forward is a base amount of $170 billion per quarter.

In the second quarter, Apple Inc. again led buybacks spending with $18.15 billion, down from a record $23.8 billion in the first quarter. Bank of America Corp. came in second with $6.51 billion in share repurchases.

Completing the top five were Oracle Corp., JPMorgan Chase & Co. and Cisco Systems Inc., which spent $6.30 billion, $5.21 billion, and $4.94 billion, respectively, on second-quarter buybacks.

Buybacks in the IT sector continued to dominate in the second quarter despite falling 20.3% to $54.21 billion from $67.99 billion in the first quarter.

Materials buybacks plunged 49.3% on a quarter-on-quarter basis to $2.42 billion, and utilities buybacks plummeted 40.4% to $882 million. Healthcare buybacks dropped 44.5% to $17.07 billion.

Dividends paid by S&P 500 companies rose 6.3% to $118.7 billion in the second quarter from $111.6 billion a year ago.

S&P Dow Jones Indices expects third-quarter dividends to be in the $122 billion range, setting a new record.

S&P Dow Jones Indices and S&P Global Market Intelligence are owned by S&P Global Inc.