In the 2023 i global dividends have reached a new record, while i buybacks recorded a decline of 14% at 1,11 trillion dollars, 181 billion less than in 2022, a figure lower than the total for 2021. This is what emerges from the latest annual study by Janus Henderson on share buybacks which however underlines how buybacks are becoming more generous in Europe.
US companies repurchased the most shares
Going into detail, according to Janus Henderson, US companies were the largest buyers of their own shares in 2023, for a total of 773 billion dollars in 2023. Compared to the previous year, however, the cut was clear: -158 billion dollars, a figure that represents a decline of 17% compared to 2022.
The ones that reduced purchases were mainly the technology companies made in the USA, which spent 69 billion dollars less than the previous year. Among these also big shots of the caliber of Microsoft and Meta, which reduced buybacks by almost a third, and Apple , which cut them by a seventh.
Sharp reductions were also recorded in much of the healthcare sector US and among financials, excluding the banking sector, where cuts in some banks were more than offset by increases in other sectors. Overall, in the United States, the number of companies that spent less on stock buybacks outnumbered companies that spent more, by a ratio of 1,8:1. Nonetheless, the value of the buybacks was 1,2 times higher than the value of dividends paid from US companies in Janus Henderson's Global Dividend Index.
In Europe, interest in increased buybacks is growing
Very different trend in Europe, where buybacks are becoming more generous. In fact, in the old continent, the total spent on share buybacks rose by 2,9% to 146 billion dollars in 2023 against an underlying increase in dividends of 20% in the same period. The variations from one country to another were notable: buybacks reached a record level in Italy (led by Unicredit and Stellantis), Spain (led by Santander, Iberdrola and Telefonica), Norway (Equinor) and Belgium (AB-Inbev and KBC), although France, Switzerland and the Netherlands saw larger buybacks by value.
The most significant contraction was recorded in Switzerland, where most companies have reduced buybacks. Among these there is Nestlé which had the biggest impact, nearly halving its program to $5,8 billion.
Overall, approximately the same number of European companies increased share buybacks and reduced them in 2023, although the strong dividend growth in 2023 caused buybacks to grow less than dividends and their impact on shareholder returns to fall to 48% of dividends paid, compared to 55% in 2022, notes Janus Henderson.
TLCs, banks and autos have repurchased the greatest number of shares
At a sectoral level, the tech, the Health and financial saw the largest reductions in share buybacks, with the impact greatest among U.S. companies. Outside the US, however, healthcare companies have increased buybacks, as have telecommunications companies, banks and vehicle manufacturers. On the other hand, companies in the chemical, mining and consumer goods sectors reduced their buybacks.
It is worth noting, the report highlights, that buybacks are highly concentrated. Just over half of the companies in the 1.200-company Janus Henderson Index repurchased shares in 2023, but just 45 of these accounted for half of the annual total spent on share repurchases globally.
