Cash-Rich Companies Choosing Stock Repurchases Rather Than Dividend Hikes: Part II

This week I will run you through the most important buyback announcements for the week of 21-24 February. While consumers and governments across the world are strapped for cash, corporations have plenty. Rather than signal long-term trust and pay more generous long-term oriented dividends, many of them have adopted share repurchases to buy back their own stock. Investors welcome these announcement as they boost earnings per share and provide a lot of support for the share price during the repurchase periods. Aetna (AET) announced an additional $750 million repurchase program, representing 4.4% of outstanding shares. Over the last five years the insurer has already bought back over 20% of its outstanding shares valued at more than $7.5 billion. In comparison, the health care benefits company pays a mere $220 million per annum in dividends. GAP (GPS) announced a new $1 billion repurchase program, representing roughly 9.1% of outstanding shares. Gap... Read more