Buybacks Down 86% As Companies Hold Tight To Their Security Blanket - Cash

I have just released the S&P 500 second quarter buyback numbers and, shock and dismay, fewer companies did buybacks and those that did spent a lot less. Basically, not many companies showed a willingness to give up their security blanket of cash to venture out into the storm of a recession, and the difficulties of financing. Specifically, S&P 500 companies did $24 billion in buybacks during the second quarter, the lowest reported amount since at least the first quarter of 1998 – when I began tracking the data. The $24 billion represented a 72% decline from the $88 billion spent during the second quarter of last year, and an 86% decline from the record $172 billion spent on stock buybacks during the third quarter of 2007. In general, buybacks have become few and far between, falling out of favor with most investors as corporations continue to build-up cash reserves to ride them through, and hopefully out of, the recession. One simple stat shows the dramatic change. At the height of the buybacks two years ago, companies spent 180% more on stock buybacks than they did on dividends. Now, even after dividends have decreased 22%, buyback spending is just half of dividends payments.

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