Author: David I. Templeton, CFA, Principal and Portfolio Manager
Late last month S&P Dow Jones Indices reported the preliminary data on dividends and buybacks for the first quarter of 2025. In the report buybacks of $293.5 billion set a record for buybacks in a quarter. Compared to buybacks in the first quarter of 2024, this represents a year over year increase of 23.9%. Dividends of $164.1 billion were down slightly on a QoQ basis but up 8.2% YoY. The combined dividend and buybacks level of $457.55 billion represents a 17.8% increase compared to the first quarter of 2024. The twelve-month dividend and buyback yield equals 3.27% and is up from the 3.20% combined twelve-month dividend and buyback yield as of March 31, 2024.
Notable highlights from S&P Dow Jones Indices' report:
Apple (AAPL) spent $26.2 billion on buybacks, the most of any issue and ranking as the fourth highest in S&P 500 history.
Information Technology and Financial sectors led buyback activity. Buybacks for Information Technology equaled $80,164 billion and Financial buybacks equaled $59,419 billion
The strength of the dividend and buyback level combined provides support for the current strength of company earnings. However, investors should place more reliance on the activity around a specific company's dividend practices versus its buyback activity. As a company begins facing financial headwinds it can quickly stop buybacks. Companies committed to maintaining a dividend that grows annually tend to be higher quality and more able to weather a tougher economic environment and can be better investments over the long run.
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