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Market Update

The End of Buybacks

With corporate earnings falling, share repurchases are declining--and that could impact shareholder returns.

Everyone knows how hard it is to generate anything more than midsingle digit capital gains these days--which is why many investors have piled into dividend stocks to try to boost total returns. It's also one of the reasons the market has seen an increase in share buybacks over the past few years. Companies, many flush with cash, are buying back outstanding stock, which then helps push up their stock price.

Companies spent $561 billion on stock repurchases in 2015: That's a 40% increase from the year before, and it was the most money spent on buybacks since 2007. According to FactSet, buybacks accounted for nearly 60% of shareholder distributions in 2015.

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