The S&P Dow Jones Indices report on Q4 buybacks in the S&P 500 shows that companies pulled back from Q1 2022 record-breaking buyback expenditures, with the exception of energy. The report also reveals that share count reduction continues, with almost one in five issues increasing their Y/Y EPS by at least 4% due to buybacks. The impact is expected to continue into 2023, despite unclear economic indicators at this point.
There were Q4 share repurchases of $211.2B (+0.2% Q/Q, -21.8% Y/Y), with 318 companies reporting buybacks of at least $5M for the quarter. The top 20 companies accounted for 45.7% of Q4 2022 buybacks, below the historical average of 47.1% and below the 49.0% level reported for Q3 2022. Information Technology led in buybacks by sector, while Apple spent the most on buybacks among companies.
The report also highlighted the tax impact of the new 1% excise tax on net buybacks, which would have cost S&P 500 companies $8.5B and reduced operating earnings by 0.51%. S&P 500 Q4 2022 dividends increased 4.1% Q/Q to a record $146.1B, setting a record for 2022 with $564.6B payment, up 10.4% Y/Y. Total shareholder returns for 2022 increased to $1.487T from $1.393T recorded in 2021.
S&P 500 Q4 Buybacks Led by Information Technology; Apple Leads the Companies
S&P Dow Jones Indices have released their report on the Q4 buybacks in the S&P 500. The report shows that companies pulled back from their Q1 2022 record-breaking buyback expenditures, with the exception of energy, which increased its buybacks due to record profits. Share count reduction continues, with nearly one in five issues increasing their Y/Y EPS by at least 4% due to buybacks. The impact is expected to continue into 2023, despite unclear economic indicators at this point, according to a Senior Index Analyst at S&P Dow Jones Indices.
The report reveals that there were Q4 share repurchases of $211.2B (+0.2% Q/Q, -21.8% Y/Y), with 318 companies reporting buybacks of at least $5M for the quarter, down from 325 in Q4 2021. For the 12-month period ending December 2022, 439 companies did some buybacks, up from 422 in the prior 2021 period.
The top 20 companies accounted for 45.7% of Q4 2022 buybacks, which is below the historical average of 47.1% and below the 49.0% level reported for Q3 2022. Buybacks stood at $922.7B for the 12-months ended December 2022, a new annual record, up 4.6% from the prior year.
In terms of sectors, Information Technology continued to lead in buybacks, while Financials decreased their buybacks, with their Q4 2022 expenditures decreasing 2.3% to $22.5B, representing 10.7% of the buybacks. Energy also decreased their buybacks, with their expenditure declining 9.9%. Health Care buybacks increased 21% for the quarter.
The report also identifies the top five companies with the highest total buybacks for Q4 2022, with Apple spending $94.1B on buybacks, up from $88.3B in the prior year. Alphabet’s 2022 expenditure was $59.3B, compared to the 2021 expenditure of $50.3B. Meta Platforms, Microsoft, and Exxon Mobil followed on the list.
The report highlights the tax impact of the new 1% excise tax on net buybacks, revealing that on a proforma basis, it would have reduced Q4 2022 operating earnings by 0.46%, and for the proforma 2022 period, it would have cost S&P 500 companies $8.5B and reduced operating earnings by 0.51%.
The report also reveals that S&P 500 Q4 2022 dividends increased 4.1% Q/Q to a record $146.1B. For 2022, dividends set a record $564.6B payment, up 10.4% Y/Y. Total shareholder returns for 2022 increased to $1.487T from the $1.393T recorded in 2021. Total shareholders’ return of buybacks and dividends increased to $357.3B in Q4 2022, up 1.7% Y/Y and down 11.6% Y/Y.
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