Stock Buybacks Are Here to Stay

During the 12 months ended June 30, Companies in the S&P 500 index spent a record $1 trillion to buy back their shares, according to S&P Dow Jones Indices. But come January, a new 1% tax on buybacks could dampen corporate America’s appetite. S&P Dow Jones estimates the tax would reduce corporate profits by half a percentage point at current buyback rates.

Buybacks have been controversial recently, with critics arguing that there are better uses for corporate cash. But an analysis of the 100 largest buyback companies in the 2020 S&P Dow Jones Indices found that their long-term stock returns generally exceeded those of the S&P 500.


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