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Dispatches Stocks

Buybacks Bounce Back in 2024

Corporate buybacks are showing a notable resurgence in 2024 after a significant decline in activity last year.

by Omar Beirat | November 2024

Corporate buybacks are showing a notable resurgence in 2024 after a significant decline in activity last year.

The study, conducted by Christine Short of Wall Street Horizon, analyzed global publicly traded companies to look at corporate buyback trends over the past few years. The study examined buyback announcements from companies and considered external factors such as interest rate changes and broader economic conditions.

Global Corporate Buyback Announcements

The analysis showed that only 617 companies announced buybacks in 2023, following a peak of 1,319 in 2021. In 2024, repurchase activity is picking up, with 565 announcements in the first three quarters of the year, compared to 440 in the same period of 2023. Goldman Sachs predicts that the total in buybacks could reach $925 billion by the end of 2024—surpassing the 2022 record of $922 billion—and could reach $1 trillion by 2025.

Researchers note that a strong economy and the prospect of lower interest rates has driven this surge in buybacks. The Federal Reserve’s 50-basis-point interest rate cut in September is expected to further accelerate this trend, encouraging even more corporations to resume or expand their buyback programs.

For investors, rising repurchase announcements potentially reflect stronger financial health and future growth prospects. Monitoring buyback trends can offer insights into broader market sentiment and economic recovery.

Source: “Are Buybacks Back? 2024 Showing Improvement After Hitting a Low Last Year,” by Christine Short of Wall Street Horizon; Advisor Perspectives, October 3, 2024.

Discussion

ROBERT A from NC posted over 1 year ago:

I don't see this as good news. Most managements cannot be trusted to accurately value their own company's stock, so they end up paying WAY too much for it. As long as the tax code offers preferential treatment to qualified dividends, I'd much prefer they distribute cash dividends to me instead of using that cash to artificially (and temporarily) inflate the stock price.


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