WEATHER AUTHORITY : Severe Thunderstorm Watch View Alerts

Tax cut fuels record $200 billion stock buyback bonanza

American companies announced a record $201.3 billion in stock buybacks and cash takeovers in May.Apple made up...

Posted: Jun 5, 2018 4:53 PM
Updated: Jun 5, 2018 4:53 PM

American companies announced a record $201.3 billion in stock buybacks and cash takeovers in May.

Apple made up nearly half that total, according to a report from investment research company TrimTabs. Last month, Apple pledged to purchase $100 billion worth of its own stock. It didn't provide a time frame for when it would complete the purchases.

Micron Technology ($10 billion) and Qualcomm ($8.8 billion) rounded out the top three in TrimTabs' report.

May's buyback announcement bonanza continues the trend started in the first quarter of 2018, when US companies completed $178 billion in buybacks. That was a record number, topping the prior record of $172 billion in 2007, right before the start of the Great Recession.

Howard Silverblatt of S&P Dow Jones Indices said that total buybacks and dividends for the past 12 months could top $1 trillion for the first time ever.

The massive uptick followed the US corporate tax cut law, which reduced the business tax rate from 35% to 21%. The tax law also gives companies a break on taxes owed when returning foreign profits.

Related: How businesses are really spending their tax cuts

Companies buy back their stock to boost prices. That reduces the number of outstanding shares, increasing demand and inflating earnings per share.

Critics say the return of capital to shareholders is a boon for Wall Street, but a slight to Main Street. Many argue the extra wealth should instead be invested to create jobs and boost wages.

Even Goldman Sachs warned against record buybacks.

"We expect cash return strategies will lag going forward," said David Kostin, the financial services company's chief US equity strategist, in April.

Instead, Goldman Sachs found that stocks of companies that have focused on capital spending, like Kohl's and Intel, have soared since the 2016 election.

Some companies have shared the early windfall with employees. For example, Walmart and Wells Fargo have devoted a portion of their tax savings to raise wages and benefits for workers. Comcast and Bank of America have rewarded workers with one-time bonuses.

Still, proponents of the buybacks are staunchly defending them. Jamie Dimon, JPMorgan Chase's CEO said on a Business Roundtable conference call Tuesday, "That is a natural function of capital markets and the proper deployment of capital."

Dimon, who's also chairman of the Business Roundtable, added that individuals may use the returned money to buy a home or start a new company or fund a venture capital firm.

"I don't understand how anyone can say that's a bad thing. That is coming from people who are basically ignorant."

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 16560

Reported Deaths: 794
CountyConfirmedDeaths
Hinds107426
Madison76728
Lauderdale75968
Neshoba72844
Jones70133
Scott66312
Forrest59539
DeSoto57510
Rankin4569
Leake45212
Holmes44330
Copiah3294
Jackson31415
Attala31118
Yazoo2964
Newton2884
Lincoln28031
Leflore27736
Oktibbeha27314
Harrison2697
Monroe26925
Wayne2623
Lamar2505
Lowndes2479
Pearl River21231
Pike20411
Adams20316
Washington1987
Warren19610
Lee1948
Noxubee1936
Covington1792
Bolivar16911
Jasper1674
Clarke15619
Smith15511
Kemper15511
Lafayette1544
Chickasaw14014
Coahoma1314
Clay1254
Winston1241
Carroll11911
Marion1169
Claiborne1155
Lawrence1071
Grenada1074
Simpson1040
Yalobusha1046
Sunflower923
Tate911
Hancock9012
Union897
Itawamba897
Marshall873
Wilkinson859
Panola843
Montgomery841
Webster844
Jefferson Davis823
Tippah7611
Calhoun674
Amite661
Walthall640
Humphreys637
Tunica583
Prentiss533
Perry513
Choctaw502
Pontotoc473
Jefferson421
Tishomingo360
Greene331
Stone320
Quitman320
Tallahatchie301
George292
Franklin292
Alcorn191
Benton140
Sharkey70
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 19073

Reported Deaths: 672
CountyConfirmedDeaths
Mobile2321118
Jefferson1901104
Montgomery185843
Tuscaloosa83616
Marshall7089
Franklin5858
Lee56234
Shelby52819
Tallapoosa43466
Butler42118
Walker3862
Elmore3749
Chambers36026
Madison3534
Unassigned3062
Morgan3021
Baldwin2939
Dallas2923
Lowndes26512
Etowah26312
DeKalb2573
Autauga2415
Coffee2391
Sumter2287
Houston2265
Bullock2176
Pike2120
Colbert1902
Hale1859
Russell1810
Barbour1771
Marengo1756
Lauderdale1722
Calhoun1673
Wilcox1577
Choctaw15310
Cullman1521
Clarke1492
St. Clair1351
Randolph1287
Dale1240
Marion12411
Pickens1205
Talladega1195
Limestone1080
Chilton1071
Greene954
Macon934
Winston910
Jackson833
Covington821
Henry822
Crenshaw783
Bibb761
Escambia753
Washington736
Blount631
Lawrence510
Monroe462
Geneva440
Perry430
Conecuh411
Coosa401
Cherokee383
Clay282
Lamar280
Fayette160
Cleburne151
Tupelo
Broken Clouds
91° wxIcon
Hi: 92° Lo: 72°
Feels Like: 99°
Columbus
Broken Clouds
89° wxIcon
Hi: 92° Lo: 71°
Feels Like: 98°
Oxford
Scattered Clouds
86° wxIcon
Hi: 89° Lo: 69°
Feels Like: 93°
Starkville
Scattered Clouds
88° wxIcon
Hi: 91° Lo: 68°
Feels Like: 94°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather