I'm a big fan of dividend growth but I also like stocks that buy back own shares. By reducing its own outstanding shares, earnings per share could get a boot.
It’s the highest shareholder friendly activity that a company can make but also very sensitive because buybacks will shut down eelier than dividend growth.
Many companies from the S&P 500 pay good dividends and buy on a regular basis shares in the same amount. If you have a stable business model, you can easily do both without hurting your operational business.
Recently, the buyback numbers from the S&P were released and some financial research firms jumped on that data to create researches. I have read them and I want to share the best buyback companies with you here today.
Most of the stocks with the highest buyback volume in Q2 outperformed the market. These are the companies with the strongest buyback programs:
10 Top Buyback stocks for Q2/2014
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| Top 10 Buyback Companies for Q2/2014 Source: Factset Buyback Quarterly |
These are the key-notes from the publishing:
- Quarterly Buybacks Declined Year-over-Year
- Q1 Buyback Leaders Take a Breather
- Consumer Discretionary Sector Increases Buybacks 35%
- Buybacks Relative to Free Cash Flow Hit 2008 Levels
These stocks have the strongest buybacks year-to-date:
Pfizer (NYSE:PFE) has a market capitalization of $188.77 billion. The company employs 77,700 people, generates revenue of $51,584.00 million and has a net income of $11,410.00 million. Pfizer’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $23,623.00 million. The EBITDA margin is 45.80 percent (the operating margin is 31.32 percent and the net profit margin 22.12 percent).
Financial Analysis: The total debt represents 21.20 percent of Pfizer’s assets and the total debt in relation to the equity amounts to 47.82 percent. Due to the financial situation, a return on equity of 14.45 percent was realized by Pfizer. Twelve trailing months earnings per share reached a value of $1.59. Last fiscal year, Pfizer paid $0.96 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 18.65, the P/S ratio is 3.63 and the P/B ratio is finally 2.48. The dividend yield amounts to 3.52 percent and the beta ratio has a value of 0.69.
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| Long-Term Stock Price Chart Of Pfizer (PFE) |
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| Long-Term Dividend Payment History of Pfizer (PFE) |
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| Long-Term Dividend Yield History of Pfizer (PFE) |
Exxon Mobil (NYSE:XOM) has a market capitalization of $402.71 billion. The company employs 75,000 people, generates revenue of $420,836.00 million and has a net income of $33,448.00 million. Exxon Mobil’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $57,483.00 million. The EBITDA margin is 13.66 percent (the operating margin is 9.58 percent and the net profit margin 7.95 percent).
Financial Analysis: The total debt represents 6.55 percent of Exxon Mobil’s assets and the total debt in relation to the equity amounts to 13.05 percent. Due to the financial situation, a return on equity of 19.17 percent was realized by Exxon Mobil. Twelve trailing months earnings per share reached a value of $7.85. Last fiscal year, Exxon Mobil paid $2.46 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 11.98, the P/S ratio is 0.95 and the P/B ratio is finally 2.34. The dividend yield amounts to 2.93 percent and the beta ratio has a value of 0.88.
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| Long-Term Stock Price Chart Of Exxon Mobil (XOM) |
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| Long-Term Dividend Payment History of Exxon Mobil (XOM) |
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| Long-Term Dividend Yield History of Exxon Mobil (XOM) |
Intl. Business Machines (NYSE:IBM) has a market capitalization of $189.18 billion. The company employs 431,212 people, generates revenue of $99,751.00 million and has a net income of $16,483.00 million. Intl. Business Machines’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $24,505.00 million. The EBITDA margin is 24.57 percent (the operating margin is 19.57 percent and the net profit margin 16.52 percent).
Financial Analysis: The total debt represents 31.47 percent of Intl. Business Machines’s assets and the total debt in relation to the equity amounts to 174.26 percent. Due to the financial situation, a return on equity of 79.15 percent was realized by Intl. Business Machines. Twelve trailing months earnings per share reached a value of $15.81. Last fiscal year, Intl. Business Machines paid $3.70 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.01, the P/S ratio is 1.90 and the P/B ratio is finally 8.78. The dividend yield amounts to 2.32 percent and the beta ratio has a value of 0.65.
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| Long-Term Stock Price Chart Of Intl. Business Machines (IBM) |
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| Long-Term Dividend Payment History of Intl. Business Machines (IBM) |
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| Long-Term Dividend Yield History of Intl. Business Machines (IBM) |
Apple (NASDAQ:AAPL) has a market capitalization of $599.45 billion. The company employs 80,300 people, generates revenue of $170,910.00 million and has a net income of $37,037.00 million. Apple’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $55,759.00 million. The EBITDA margin is 32.62 percent (the operating margin is 28.67 percent and the net profit margin 21.67 percent).
Financial Analysis: The total debt represents 8.19 percent of Apple’s assets and the total debt in relation to the equity amounts to 13.73 percent. Due to the financial situation, a return on equity of 30.64 percent was realized by Apple. Twelve trailing months earnings per share reached a value of $6.19. Last fiscal year, Apple paid $1.63 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.27, the P/S ratio is 3.53 and the P/B ratio is finally 5.13. The dividend yield amounts to 1.87 percent and the beta ratio has a value of 0.88.
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| Long-Term Stock Price Chart Of Apple (AAPL) |
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| Long-Term Dividend Payment History of Apple (AAPL) |
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| Long-Term Dividend Yield History of Apple (AAPL) |
These are the best buyback companies for 2014
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| Top 10 Buyback Companies for 2014 Source: Factset Buyback Quarterly |
If you compare the billion of stock buybacks with the stock price, you see that only Apple has benefited from the program. Those shares gained 25 percent this year and 56 percent over the past year while the others are flat or down YTD.
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| Stock Performance YTD Top 10 Buyback Companies for 2014 |
The statistic shows that the one-year performance is much better, around 20 percent or so.
What do you think? Are those dividend payer and stock repurchasing companies the best of investors like us? Please let me know by leaving a comment. Thank you for reading and commenting.
*I am long IBM. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.
For the other stocks: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.
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