Buybacks have out sized dividend payments every quarter since 2004, with the only exception being during the 2008/09 recession and in Q2/Q3 of 2020.
In the early 2000’s, buybacks and dividends were near equals in terms of the volumes being returned to investors, with dividends being slightly higher most quarters. Since 2004, however, buybacks have accounted for over 50% of payouts every single quarter with two exceptions: from Q4 2008 to Q4 2009 when buybacks averaged only 41%, bottoming at 34% in Q3’09, and in Q2 & Q3 2020 when buybacks represented 43% and 47%, respectively. It’s back to the status quo since Q4’20 with buybacks representing 59% in Q1’21. This inversion period, along with other times, display the flexibility of buyback programs relative to dividend payments.
Buybacks vs Dividends Ratio
In 2018, 64% of capital returned to shareholders came from buybacks versus 36% from dividends; this ratio moderated in 2019 to a 60/40 split which remained through Q1 of 2020.
The split of buybacks versus dividends has widened in recent years:
Buyback vs dividends split
- Q1’21: 59% (buybacks) vs 41% (dividends)
- Q4’20: 52% (buybacks) vs 48% (dividends)
- Q3’20: 47% (buybacks) vs 53% (dividends)
- Q2’20: 43% (buybacks) vs 57% (dividends)
- Average since 2014: 58% vs 42%
Data sources: S&P Dow Jones Indices, Guzman & Co.
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