S&P 500 Buybacks Decline 55.4% to $88.7 Billion; Significant Reductions Expected to continue in Q3 2020

  • Q2 2020 share repurchases were $88.7 billion – the lowest since March 2012 and a 55.4% decline from Q1 2020 and 46.4% decline from Q2 2019.
  • 252 issues reported little or no buybacks for the quarter, compared to 105 in Q1 2020 and 133 in Q2 2019.
  • The issues which did do buybacks dominated the expenditures, as the top 20 issues accounted for 87.2% of the Q2 2020 buybacks, up from 46.7% in Q1 2020 and the historical average of 44.5%.
  • Reduced Q2 2020 expectations were fulfilled as companies prioritized their expenditures and protected their liquidity. Significantly reduced expectations continue for Q3 2020, especially for financial issues, where big-banks have suspended their buybacks; issues with strong cash-flow are expected to continue buybacks.

NEW YORK, September 15, 2020: S&P Dow Jones Indices (“S&P DJI”) announced today that preliminary Q2 2020 S&P 500® stock buybacks, or share repurchases, were $88.7 billion – a 55.4% decrease from Q1 2020's $198.7 billion and down 46.4% from Q2 2019's $165.5 billion record.

Historical data on S&P 500 buybacks are available at www.spdji.com/indices/equity/sp-500.

Key Takeaways:  

  • Companies posted a sharp decrease in buyback expenditures as the full effect of the economic impact from COVID-19 was felt. For the quarter, 49% of the S&P 500 companies did buybacks, compared to 79% in Q1 2020.
  • Q2 2020 buybacks were $88.7 billion, down 55.4% from $198.7 billion in Q1 2020 and down 46.4% from $165.5 billion in Q2 2019.
  • For the 12-month June 2020 period, companies spent $644.9 billion, down 19.2% from their 12-month June 2019 expenditure of $798.0 billion. The record 12-month high is $823.2 billion in March 2018.
  • The cumulative rolling four quarters of repurchases continued to impact EPS, but declined, as 18.0% of the issues reduced share counts by at least 4% year-over-year, down from Q1 2019’s 19.6% and 24.2% in Q2 2019; for Q3 2020 the rate is expected to decline further.
  • S&P 500 Q2 2020 dividends declined 6.25% to $119.0 billion, from the Q1 2020 record $127.0 billion, and increasing 0.3% from the Q2 2019 payment of $118.7 billion. For the 12-month period, dividends set a record, at $495.5 billion, (the prior record was Q1 2020, at $495.1 billion), up 5.1% from the corresponding 2019 period’s $471.5 billion.
  • Total shareholder return of buybacks and dividends for the quarter came in at $207.5 billion, down 36.3% from the Q1 2020 period expenditure of $325.7 billion and down 26.9%% from the $284.1 billion reported for Q2 2019.
  • Total shareholder return for the 12-month June 2020 period declined to $1.140 trillion from June 2019’s $1.270 trillion.
  • The top 20 issues dominated the buybacks, accounting for 87.2% of all buybacks, up from Q1 2020’s 46.7% and the historical 44.5% average.

"Companies pulled back on buybacks in Q2 2020 as the COVID-19 impact on sales, liquidity, and business lines displaced share repurchases," said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices. "Q3 2020 expenditures are expected to be a tick better as those who have strong cash-flow and active business lines continue to buy and some recovering issues venture back-in, even if just to cover employee options and protect EPS."

"Looking beyond Q3, Q4 2020 remains contingent on the economy, which is contingent on the COVID-19 recovery," Silverblatt continued. "As businesses reopen and the economy picks up, companies will need to address prior actions as well as initiate new procedures and policies to function in the new environment, including potential reorganization to address employee location needs and shifts in customer base and cycles. These expenditures could limit the discretionary buybacks they’re able to do."

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