Stock Buybacks Are Here to Stay

During the 12 months ended June 30, Companies in the S&P 500 index spent $1 trillion to buy back their own shares, according to S&P Dow Jones Indices. But in January, a new 1% tax on repurchases could reduce the appetite of American companies. S&P Dow Jones estimates that the tax will reduce profits by half a million percent at current purchase prices.

Buybacks have become a hot topic lately, with critics saying there are better uses for the company’s cash. But a 2020 S&P Dow Jones Index analysis of the 100 companies with the most buybacks found that their long-term returns outperformed the S&P 500.


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