Benzinga·2025-12-12 18:41Core Viewpoint - Stock market buybacks are an effective method for publicly traded companies to reward shareholders and demonstrate confidence for 2026 [1] Buyback Rationale - Companies can repurchase shares instead of reinvesting all profits or increasing dividends, which lowers share count and boosts metrics like earnings per share (EPS) [1][2] - A reduction in outstanding shares leads to an increase in EPS, benefiting long-term shareholders by increasing their ownership percentage [2][3] Benefits of Buybacks - Buybacks provide a targeted return on capital, favoring shareholders who prefer this method over dividends, which are taxable and distributed to all shareholders [3] - Remaining shareholders benefit from a higher ownership percentage when shares are repurchased [3] Notable Companies Engaging in Buybacks - Apple Inc.: - Year-to-date performance of +10.27% - Repurchased $20 billion in stock in Q3 and approximately $91 billion for the fiscal year as of October 31 [6][7] - Strong cash flow and disciplined capital return make it a solid long-term investment [7][9] - Qualcomm Inc.: - Repurchased 50 million shares since November 2024, returning $7.76 billion to shareholders [10] - Demonstrates confidence in its core business despite macroeconomic challenges [11][12] - Home Depot: - Launched a $15 billion stock repurchase program in 2023 but paused in 2025 to focus on debt management [14] - Anticipates long-term growth in home improvement demand, with a pent-up demand of around $20 billion expected in 2026 [15][16] Market Trends - 2026 is projected to be a significant year for share repurchases, with companies authorizing and deploying more cash for buybacks than ever before [4] - Companies with healthy cash flows and consistent capital-return policies are more likely to engage in effective buybacks [4]