S&P 500 Buybacks Double their Post-Covid Low; Companies repurchased 36.5% more shares than in Q4 2020

  • Q1 2021 share repurchases were $178.1 billion, rebounding 36.5% from Q4 2020’s $130.5 billion expenditure, up 100.9% from the Q2 2020 recent low of $88.7 billion, but down 10.4% year-over-year from the pre-COVID Q1 2020 $198.7 billion.
  • 335 companies reported buybacks of at least $5 million for the quarter, up from 244 in Q4 2020, 190 in Q3 2020, 170 in Q2 2020 and down from 373 in Q1 2020
  • Buybacks remained top heavy but significantly less so, with the top 20 issues accounting for 53.3% of Q1 2021 buybacks, down from 66.3% in Q4 2020, 77.4% in Q3 2020, and 87.2% in Q2 2020, but still up from the historical pre-COVID historical average of 44.5%.
  • For the 12-month March 2021 period, buybacks were $499.1 billion, a 30.8% decrease from the prior 12-month March 2020 period of $721.6 billion.
  • Buybacks are expected to continue at a higher level in 2021 as big banks, via Fed approval for the second half of the year, have returned to the buyback market, and more companies are expected to expand their buybacks to discretionary purchases used to reduce share count and increase earnings-per-share
  • 5.9% of companies reduced share counts by at least 4% year-over-year down from Q4 2020's 6.0%, and down significantly from Q1 2020’s 19.6% (the recent high was in Q1 2016, at 28.2%).
  • S&P 500 Q1 2021 dividends increased 1.9% to $123.9 billion from Q4 2020’s $121.6 billion and were 2.4% less than the record $127.0 billion in Q1 2020. For the 12-month March 2021 period, dividends were $480.1 billion, down 3.0% on an aggregate basis from prior period’s $495.1 billion.
  • Total shareholder return of buybacks and dividends in Q1 2021 was $302.0 billion, up 19.8% from Q4 2020’s $252.1 billion and down 7.3% from Q1 2020’s $325.7 billion (Q4 2018 holds the record, at $342.8 billion).
  • Total shareholder return for the 12-months March 2021 declined to $0.98 trillion from 12-month March 2020’s $1.22 trillion.

NEW YORK, June 15, 2021: S&P Dow Jones Indices (“S&P DJI”) announced today that preliminary Q1 2021 S&P 500® stock buybacks, or share repurchases, were $178.1 billion, a 36.5% increase from Q4 2020's $130.5 billion, and 100.9% above the recent Q2 2020 low of $88.7 billion. The year-over-year pre-COVID rate was 10.4% less than Q1 2020’s $198.7 billion expenditure. For the 12-month March 2021 period, buybacks were $499.1 billion, down 30.8% from $721.6 billion in the 12-month March 2020 period.

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

"Companies almost fully returned to the buyback market in Q1 2021 after their Q2 2020 COVID inspired departure, as 335 issues did significant open-market purchases, up from 244 last quarter and 170 in Q2 2020. Given the strong and expected record level cash-flow from Q1 2021, the full return to pre-COVID levels is expected later in the year,” said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.

Remainder 2021 Outlook:

Silverblatt added, "Companies are expected to fully cover their employee stock options via buybacks, as discretionary buybacks, which reduce share count and increase earnings-per-share, are expected to increase to near record levels by year-end, subject to the continuance of consumer spending which produced a record Q1 earnings series."

Q1 2021 GICS® Sector Analysis:

Information Technology continued to lead and dominate in buybacks, but at a reduced rate, as Financials re-entered the buyback market. For Q1 2021 IT’s share declined to 31.6% of all S&P 500 buybacks from Q4 2020’s 42.9%, as their expenditure ticked up (0.5%) to $56.4 billion from the prior quarter’s $56.1 billion, but was shy (-4.7%) of the Q1 2020 expenditure of $59.1 billion. For the 12-mont March 2021 period, the sector spent $199.1 billion, representing 39.9% of all S&P buybacks, down from the prior 12-month period of $216.0 billion, which represented 29.9% of all buybacks

Financial buybacks returned, spending $35.4 billion in Q1 2021, representing 19.9% of all buybacks, up 160% from the Q4 2020 $13.6 billion, which accounted for 10.4% of the buybacks, and was 24.1% lower than the pre-COVID Q1 2020 $46.6 billion expenditure (23.5% of all buybacks). For the 12-month period, the group spent $69.4 billion (with Berkshire Hathaway accounting for $29.5 billion, or 42.5%), down from the prior period of $182.8 billion (when Berkshire spent $5.0 billion, or 2.7% of all Financial buybacks).

Health Care increased 35.8% to $20.4 billion, from the prior quarter’s $15.0 billion and a tick below the Q1 2020 $20.8 billion. As a percentage of all buybacks, Health Care remains stable, representing 11.4% of all buybacks, compared to last quarters’ 10.5%, as the 12-month period was 10.8% and the prior 12-month’s 10.2%.

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