Since 1991, a sector-neutral basket of the S&P 500 stocks with the highest trailing combined dividend and buyback yields has returned an annualized 15.7% versus 13.8% for the top capex + R&D spenders and 12.8% for S&P 500. It seems this could be a great way to invest.
What is a stock purchase?
A stock repurchase occurs when a company asks stockholders to tender their shares for repurchase by the company. This is an alternate way for a company to increase value for stockholders. First, a repurchase can be used to restructure the company's capital structure without increasing the company's debt load.
Additionally, rather than a company changing its dividend policy, it can offer value to its stockholders through stock repurchases, keeping in mind that capital gains taxes are lower than taxes on dividends.
Advantages of a Stock Repurchase
Many companies initiate a share repurchase at a price level that management deems a good entry point. This point tends to be when the stock is estimated to be undervalued. If a company knows its business and relative stock price well, would it purchase its stock price at a high level? The answer is no, leading investors to believe the management perceives its stock price to be at a low level.
Unlike a cash dividend, a stock repurchase gives the decision to the investor. A stockholder can choose to tender his shares for repurchase, accept the payment and pay the taxes. With a cash dividend, a stockholder has no choice but to accept the dividend and pay the taxes.
At times, there may be a block of shares from one or more large shareholders that could come into the market, but the timing may be unknown. This problem may actually keep potential stockholders away since they may be worried about a flood of shares coming onto the market and lessening the stock's value. A stock repurchase can be quite useful in this situation.
However, let's come back to the real facts from the market. Attached you will find 10 stocks with the highest buyback yield of the past twelve months. The yield starts at 14.9% and ends at nearly 40%. Great values.
Here they are sorted by yield...
Navient -- Yield: 4.82%
Navient (NASDAQ:NAVI) employs 7,300 people, generates revenue of $4,295.00 million and has a net income of $996.00 million. The current market capitalization stands at $4.19 billion.Navient’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,490.00 million. The EBITDA margin is 34.69% (the operating margin is 37.25% and the net profit margin 23.19%).
Financials: The total debt represents 95.00% of Navient assets and the total debt in relation to the equity amounts to 3,205.11%. Due to the financial situation, a return on equity of 24.37% was realized by Navient.
Twelve trailing months earnings per share reached a value of $2.33. Last fiscal year, Navient paid $0.64 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 5.88, the P/S ratio is 0.98 and the P/B ratio is finally 1.17. The dividend yield amounts to 4.82%.
Stock Charts:
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| Long-Term Stock Price Chart of Navient (NAVI) |
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| Long-Term Dividend Payment History of Navient (NAVI) |
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| Long-Term Dividend Yield History of Navient (NAVI) |
H & R Block -- Yield: 3.85%
H & R Block (NYSE:HRB) employs 2,400 people, generates revenue of $3,038.15 million and has a net income of $383.55 million. The current market capitalization stands at $5.14 billion.H & R Block’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $812.51 million. The EBITDA margin is 26.74% (the operating margin is 20.76% and the net profit margin 12.62%).
Financials: The total debt represents 52.41% of H & R Block assets and the total debt in relation to the equity amounts to 6,458.91%. Due to the financial situation, a return on equity of 41.25% was realized by H & R Block.
Twelve trailing months earnings per share reached a value of $1.63. Last fiscal year, H & R Block paid $0.80 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 14.14, the P/S ratio is 1.65 and the P/B ratio is finally 218.01. The dividend yield amounts to 3.85%.
Stock Charts:
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| Long-Term Stock Price Chart of H & R Block (HRB) |
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| Long-Term Dividend Payment History of H & R Block (HRB) |
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| Long-Term Dividend Yield History of H & R Block (HRB) |
Harley-Davidson -- Yield: 2.67%
Harley-Davidson (NYSE:HOG) employs 5,700 people, generates revenue of $5,995.40 million and has a net income of $752.21 million. The current market capitalization stands at $9.65 billion.Harley-Davidson’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,353.77 million. The EBITDA margin is 22.58% (the operating margin is 19.28% and the net profit margin 12.55%).
Financials: The total debt represents 68.91% of Harley-Davidson assets and the total debt in relation to the equity amounts to 373.56%. Due to the financial situation, a return on equity of 31.68% was realized by Harley-Davidson.
Twelve trailing months earnings per share reached a value of $3.81. Last fiscal year, Harley-Davidson paid $1.24 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 13.62, the P/S ratio is 1.56 and the P/B ratio is finally 5.26. The dividend yield amounts to 2.67%.
Stock Charts:
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| Long-Term Stock Price Chart of Harley-Davidson (HOG) |
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| Long-Term Dividend Payment History of Harley-Davidson (HOG) |
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| Long-Term Dividend Yield History of Harley-Davidson (HOG) |
Corning Incorporated -- Yield: 2.35%
Corning Incorporated (NYSE:GLW) employs 35,700 people, generates revenue of $9,111.00 million and has a net income of $1,339.00 million. The current market capitalization stands at $24.24 billion.Corning Incorporated’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2,491.00 million. The EBITDA margin is 27.34% (the operating margin is 14.51% and the net profit margin 14.70%).
Financials: The total debt represents 15.70% of Corning Incorporated assets and the total debt in relation to the equity amounts to 23.86%. Due to the financial situation, a return on equity of 6.94% was realized by Corning Incorporated.
Twelve trailing months earnings per share reached a value of $1.82. Last fiscal year, Corning Incorporated paid $0.48 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.69, the P/S ratio is 2.61 and the P/B ratio is finally 1.57. The dividend yield amounts to 2.35%.
Stock Charts:
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| Long-Term Stock Price Chart of Corning Incorporated (GLW) |
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| Long-Term Dividend Payment History of Corning Incorporated (GLW) |
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| Long-Term Dividend Yield History of Corning Incorporated (GLW) |
American International Group -- Yield: 2.20%
American International Group (NYSE:AIG) employs 66,400 people, generates revenue of $58,918.00 million and has a net income of $2,222.00 million. The current market capitalization stands at $63.43 billion.American International Group’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $15,785.00 million. The EBITDA margin is 26.79% (the operating margin is 7.76% and the net profit margin 3.77%).
Financials: The total debt represents 5.89% of American International Group assets and the total debt in relation to the equity amounts to 32.62%. Due to the financial situation, a return on equity of 2.23% was realized by American International Group.
Twelve trailing months earnings per share reached a value of $-0.05. Last fiscal year, American International Group paid $0.81 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is not calculable, the P/S ratio is 1.06 and the P/B ratio is finally 0.77. The dividend yield amounts to 2.20%.
Stock Charts:
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| Long-Term Stock Price Chart of American International Group (AIG) |
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| Long-Term Dividend Payment History of American International Group (AIG) |
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| Long-Term Dividend Yield History of American International Group (AIG) |
Motorola Solution -- Yield: 2.15%
Motorola Solution (NYSE:MSI) employs 14,000 people, generates revenue of $5,695.00 million and has a net income of $643.00 million. The current market capitalization stands at $12.79 billion.Motorola Solution’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,220.00 million. The EBITDA margin is 21.42% (the operating margin is 17.35% and the net profit margin 11.29%).
Financials: The total debt represents 52.11% of Motorola Solution assets and the total debt in relation to the equity amounts to not calculable%. Due to the financial situation, a return on equity of 48.69% was realized by Motorola Solution.
Twelve trailing months earnings per share reached a value of $2.88. Last fiscal year, Motorola Solution paid $1.43 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 26.49, the P/S ratio is 2.23 and the P/B ratio is finally not calculable. The dividend yield amounts to 2.15%.
Stock Charts:
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| Long-Term Stock Price Chart of Motorola Solution (MSI) |
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| Long-Term Dividend Payment History of Motorola Solution (MSI) |
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| Long-Term Dividend Yield History of Motorola Solution (MSI) |
Symantec Corporation -- Yield: 1.20%
Symantec Corporation (NASDAQ:SYMC) employs 11,000 people, generates revenue of $3,600.00 million and has a net income of $-821.00 million. The current market capitalization stands at $15.84 billion.Symantec Corporation’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $892.00 million. The EBITDA margin is 24.78% (the operating margin is 12.69% and the net profit margin -22.81%).
Financials: The total debt represents 18.76% of Symantec Corporation assets and the total debt in relation to the equity amounts to 60.04%. Due to the financial situation, a return on equity of -17.08% was realized by Symantec Corporation.
Twelve trailing months earnings per share reached a value of $-1.34. Last fiscal year, Symantec Corporation paid $4.60 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is not calculable, the P/S ratio is 4.34 and the P/B ratio is finally 4.18. The dividend yield amounts to 1.20%.
Stock Charts:
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| Long-Term Stock Price Chart of Symantec Corporation (SYMC) |
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| Long-Term Dividend Payment History of Symantec Corporation (SYMC) |
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| Long-Term Dividend Yield History of Symantec Corporation (SYMC) |
American Airlines -- Yield: 1.15%
American Airlines (NASDAQ:AAL) employs 118,500 people, generates revenue of $40,990.00 million and has a net income of $7,610.00 million. The current market capitalization stands at $18.42 billion.American Airlines’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $9,458.00 million. The EBITDA margin is 23.07% (the operating margin is 15.14% and the net profit margin 18.57%).
Financials: The total debt represents 42.87% of American Airlines assets and the total debt in relation to the equity amounts to 368.31%. Due to the financial situation, a return on equity of 198.80% was realized by American Airlines.
Twelve trailing months earnings per share reached a value of $10.40. Last fiscal year, American Airlines paid $0.40 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 3.39, the P/S ratio is 0.45 and the P/B ratio is finally 3.84. The dividend yield amounts to 1.15%.
Stock Charts:
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| Long-Term Stock Price Chart of American Airlines (AAL) |
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| Long-Term Dividend Payment History of American Airlines (AAL) |
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| Long-Term Dividend Yield History of American Airlines (AAL) |
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| 10 Stocks With The Highest Buyback Yield (click to enlarge) |
