Share buybacks jumped 22% worldwide in 2022, year-on-year, and reached a record $1310 billion, almost as much as dividends paid over the same period, according to a study published Thursday, May 11.
The overall trend is even more impressive: the value of share buybacks has tripled in ten years, while dividends have increased by only 54% to reach $1390 billion in 2022. To present these figures, asset manager Janus Henderson studied the 1200 largest listed companies. In 2012, the amount of dividends paid was twice as high as share buybacks, while the two are almost equal in 2022.
Boosting investment performance
This strong growth "reflects the strength of earnings and free cash flow, as well as the desire to reward shareholders without raising unnecessary expectations of dividends," said Ben Lofthouse, head of Janus Henderson's global equity team.
Buying back your own shares makes it possible to remunerate shareholders while supporting the share price, and thus boost investment performance. This practice is much more entrenched in the United States, which accounts for three-quarters of share buybacks in 2022. In particular, media and technology are "traditionally driven by share buybacks," the value of which represented "eight times" the dividends paid in 2022, the study said.
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The oil sector has experienced the strongest growth
Janus Henderson cites Meta, parent company of Facebook, and Alphabet, parent company of Google, which prefer to buy back their own shares rather than pay an annual dividend. The Apple juggernaut also bought $89 billion worth of its shares in 2022, "7% of the global total," according to Janus Henderson.
The oil sector has seen the strongest growth in share buybacks, quadrupling between 2021 and 2022. Chevron announced in late January one of the largest share buyback programs ever announced, of up to $75 billion, and ExxonMobil will pay up to $50 billion.
These announcements were not without political discontent. In the United States, President Joe Biden's 2024 budget includes "a quadrupling of the tax applied to share buybacks".