Here are seven companies that have aggressive buybacks.
Stock buybacks took a big dive in 2020 as companies fought to preserve their balance sheets during the economic downturn. In fact, buybacks dropped by 41% in the first three quarters of the year. However, there were still plenty of companies with the financial flexibility to scoop up shares of their own stock during the dip. By reducing their share counts in 2020, these buyback stocks are better-positioned than peers to grow earnings per share in 2021 and beyond. Here are seven SP 500 companies that continued their stock buybacks even during the worst of the 2020 downturn.
Apple (ticker: AAPL)
Not only is Apple the most valuable public company, but it has also been the champion of stock buybacks in recent years. SP 500 stock buybacks plummeted in the second quarter of 2020 during the early stages of the health crisis. However, Apple repurchased $17.55 billion in shares in the second quarter this year, down just 3.3% from a year ago and more than any other SP 500 company. In fact, Apple has $282.87 billion in buybacks in the past five years, about 3.5 times as much as any other company.
T-Mobile US (TMUS)
T-Mobile was a close second behind Apple with $17.12 billion in share buybacks in the second quarter. However, most of those buybacks were associated with a one-time sale of roughly 30 million shares by SoftBank, which was the majority owner of Sprint before its merger with T-Mobile. As a result, T-Mobile's stock buybacks jumped from $141 million in the first quarter of 2020 to $17.13 billion in the second quarter and then back down to $2.54 billion in the third quarter. Thanks to SoftBank, T-Mobile will end up among the biggest share buyers of 2020.
Like most of the stocks on this list, Google parent Alphabet has navigated the economic downturn relatively well. The company reported its first negative revenue growth in the second quarter, but it also bought back $6.85 billion in stock during the same quarter. That buyback rate is nearly double the $3.58 billion in buybacks Alphabet had during the second quarter of 2019. When the advertising business bounced back in the third quarter, so did Alphabet's revenue growth. Alphabet's revenue was up 14% in the third quarter, and net income was up 59.1% year over year.
Microsoft Corp. (MSFT)
Microsoft's cloud services and professional software businesses have boomed in 2020 thanks to a surge in remote work. Microsoft invested $5.79 billion buying back shares in the second quarter. In the third quarter, the company returned another $9.5 billion to shareholders via dividends and buybacks. Over the past decade, Microsoft has bought back a total of $124.69 billion in stock, more than any other company except Apple. That 10-year buyback spending total is larger than the entire market cap of tech giant IBM (IBM), which is now worth $110.73 billion.
Regeneron Pharmaceuticals (REGN)
Regeneron Pharmaceuticals' big 2020 buyback numbers were boosted by a deal to reacquire $5 billion in shares from investor Sanofi (SNY). Regeneron bought back $476 million in stock in the first quarter and $5.47 billion in the second quarter as part of the Sanofi deal. In November, Regeneron announced it has authorized another $1 billion buyback program with no expiration date, so investors can anticipate more buybacks in 2021 and beyond. Regeneron has been diversifying its business away from reliance on key drug Eylea, and its 33% year-to-date gain is more than double the SP 500's overall return.
Oracle Corp. (ORCL)
Oracle has been one of the most aggressive buyback stocks in the market in recent years relative to its size. Oracle bought back $5.35 billion in stock in the second quarter and has bought back $82.77 billion in shares over the past five years, more than any other company other than Apple. With a market cap of just $182 billion, Oracle has repurchased 45.4% of its current market cap since 2015. That percentage dwarfs even Apple, which has repurchased just 13.6% of its current market cap in that stretch. Oracle pays a solid 1.6% dividend as well.
For decades, Warren Buffett shunned Berkshire Hathaway share buybacks, instead preferring to put the company's excess cash to work acquiring other companies. In 2011, Buffett finally caved and started buying back Berkshire shares, but he really stepped up his buyback game in 2020. In the second quarter, Berkshire repurchased nearly $5 billion in stock. In the third quarter, Buffett got even more aggressive with a record $9 billion in quarterly buybacks. Investors can expect more buybacks ahead given Berkshire's $145.7 billion cash pile.
Stocks with strong buyback prospects:
-- Apple (AAPL)
-- T-Mobile US (TMUS)
-- Microsoft Corp. (MSFT)
-- Regeneron Pharmaceuticals (REGN)
-- Oracle Corp. (ORCL)