Stock Buybacks Are Here to Stay

during the 12 months ending June 30; S&P 500 companies spent a record $1 trillion to buy back their own stock, according to S&P Dow Jones Indices. But a new 1% tax on buybacks in January could dampen corporate America’s appetite. S&P Dow Jones estimates the tax would reduce corporate profits by half a percentage point at current buyback rates.

Buybacks have recently become controversial, with critics arguing that there are better uses for corporate cash. But a 2020 S&P Dow Jones Indices analysis of the 100 largest buyback companies found that their long-term stock returns generally outperformed the S&P 500.


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