Corporate America Is Buying Back Stocks at Record-Setting Pace
Corporate America Is Buying Back Stocks at Record-Setting Pace
If you don’t follow the stock market closely then you may have missed an ongoing trend this year. Corporate America is buying back stocks at a massive rate. In fact, these buybacks are happening at a record-setting pace. So how big are the numbers, exactly? They’re massive. According to Howard Silverblatt of S&P Dow Jones Indices, S&P companies have poured at least $178 billion into buying back stocks during the first three months of the year, alone.
Most Ever Spent on Buybacks in a Quarter
That represents an increase of 34 percent over the same period last year. Italso sets a new all time recordover the$172 billion set back in 2007. So which companies have been the most active? Apple ended up at the top of the list, by rewarding its shareholders with $22.8 billion in buybacks. That is a huge number. In fact, it’s the most that any company has ever purchased in buybacks in any one quarter in history.
Tax Cut and Jobs Act Started the Process
So what’s behind the huge buyback barrage? It started as soon as the new Tax Cut and Jobs Act went into effect at the beginning of the year. Thanks to the law, the new corporate tax rate dropped from 35 percent all the way down to 21 percent. The new law also gave companies a nice tax break on the amount they would owe when they bring back foreign profits to the U.S. To be clear, profits were also already creeping up, with the improving economy.
Employees Seeing Several Benefits
Therefore, these two tax breaks have combined to increase company profits, much of which has been returned to shareholders. Additionally, according to the White House, more than 5.5 million employees have already seen pay raises, tax cut bonuses, or 401K increases.
Not Much Business Spending
On the other hand the tax cuts were also supposed to encourage companies to increase spending on infrastructure, equipment, factories and other things. However, so far, increased business spending has yet to happen. The idea is that the increase spending would help create jobs and boost the economy. But many economists are not surprised by the lack of business expenditures to this point. It’s common for companies to spend their windfall on Wall Street instead of on Main Street. These economists say that just because companies have more cash you shouldn’t expect them to reinvest it back into their business.
Buybacks Will Likely Continue
Time will tell if some of these gains will eventually start to go towards expanding businesses and creating more jobs. But for now, current employees and shareholders are reaping the benefits of the extra corporate profits created by the Tax Cut and Jobs Act. In fact, some analysts predict that the buybacks, plus dividends, which make up total shareholder payouts, could reach more than $1 trillion for the last 12 months. That would be the first time in history that would have occurred.
We hope you found this article about “Corporate America Is Buying Back Stocks at Record-Setting Pace” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
To receive our free newsletter, contact us here.
Subscribe to our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Keep Your Small Business’s Taxes Small as Well
Keep Your Small Business’s Taxes Small as Well Small Business Owner Do you run a small business? Are your hands always full, or perhaps overflowing? Small business owners never run out of things to do, which means that sometimes certain things get overlooked or put on the back burner, including taxes. Unfortunately, you can’t really…
Disney and the Not-So-Wonderful World of Taxes
Disneyland is often referred to as the happiest place on earth, but according to the Disney Company’s CEO, Robert Iger, the U.S. tax system and policies are putting a real damper on all the fun. According to a recent report from CNNMoney, Mr. Iger told the news outlet that the country’s corporate tax rates…
Will Taxing the Wealthy Really Fix Income Inequality?
If you pay attention to any political programs or follow any news about the economy and taxes, then you no doubt have heard plenty of debate regarding income inequality. The fact is there is a lot of income inequality in the country. Whether you side with the haves or the have-nots, the fact remains that…
Are High Taxes the Real Reason Why Wealthy People Move?
Despite several reports that many of the wealthiest people in America are fleeing to other more tax-friendly states, a new report suggests that might not be the case. Of course, there have been some recent cases where these exact circumstances have occurred so there is precedence in this matter. However, it appears that not…