Investing.com -- Stock buybacks among S&P 500 companies climbed by nearly a fifth in the fourth quarter from the prior quarter, with Apple leading the way, buying $22.7 billion of its stock during the quarter, the ninth highest level of share repurchases in S&P 500 history.
S&P 500 Q4 2023 buybacks were $219.1 billion, up 18.0% from Q3 2023’s $185.6 billion and up 3.7% from Q4 2022’s $211.2 billion, S&P Global said in a press release Monday. Apple Inc (NASDAQ:AAPL) spent $22.7 billion on share repurchases, up from Q3 2023’s $21.3 billion.
But for 2023, a year in which many megacap companies have focused on boosting operational efficiency and keeping costs lows, Apple's $83.9 billion of stock buybacks is down from 2022’s $94.1 billion.
Akin to the broader market melt-up, the largest buybacks were seen among the biggest companies in the S&P 500, with the top 20 making up about 54.1% of Q4 2023 buybacks, the report said.
Other 'magnificent 7' companies also made the top list for stock buybacks, with Alphabet Inc Class A (NASDAQ:GOOGL) spending $16.2 billion in Q4, up from the $15.8 billion in Q3 2023 and boosted 2023 hare repurchases to $61.5 billion from $59.3 billion a year earlier.
Chip stocks were also in the ascendency, Broadcom (NASDAQ:AVGO) was a notable for a jump in stock repurchase, spending about $8.3 billion in Q4, up from $0.6 billion in Q3 2023; the 2023 expenditure was $14.5 billion versus 2022’s $6.9 billion.
While the big stock buybacks for S&P 500 companies improved their share prices - as the number of outstanding shares declined - the boost to earnings was lukewarm. Just 12.3% of the companies announcing buybacks saw a "significant increase (of at least 4%) in their EPS due to share count reduction, compared to 19.4% in Q4 2022," the report added.
The wave of stock buybacks, however, is likely to slow as the expectations for rates to remain to higher for longer, increase the cost of financing buybacks, Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices said Monday.
The top-tier companies with healthy cash flows, however, will continue to have ability to return capital to shareholders and issue buybacks that will likely positively impact their EPS, Silverblatt added.