First-Ever $1 Trillion Stock Buyback Could Occur This Year

As Warren Buffett often said, those who oppose stock buybacks are "financial illiterates." It is true that some may oppose stock buybacks, but as long as cash flows remain strong, Wall Street will continue its love affair with dividends and stock buybacks for all time to come.

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Both dividends and buybacks for S&P 500 companies reached record levels in 2022:

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Buybacks: $930 billion (up 5.5% on a year-over-year basis)

Dividends: $564 billion (up 6.4% year over year)

Source: S&P Global

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This seems to be continuing into 2023.

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The Occidental Petroleum Company announced on Monday that it was increasing its dividend by 38% (to $0.18 from $0.13 per share). Although Occidental does not pay a large dividend (it's now only 1.2%), it's part of a larger trend of increasing dividends and buybacks that began anew in 2022 that's resulted in dividend growth and buybacks.

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In the same vein, Chevron announced that in the second quarter, it would raise the annual rate of its share buybacks to $17.5 billion; it was earlier $15 billion.

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As part of its recent announcement, the company stated that it would be buying back $75 billion over the next few years, following up on its announcement made late in January. There is an estimated 20% shareholding of the company if this transaction is fully executed.

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While we don't have data for 2023 yet, Howard Silverblatt from S&P Global says while we don't have data for 2023 yet, Howard Silverblatt from S&P Global says, “I’m looking for $1 trillion in S&P buybacks and a mid-single digit increase in dividends.”

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This would be the first time buybacks had reached $1 trillion, a figure that would represent a roughly 7% increase and would mark the first time buybacks have reached that level.

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Along with a mid-single-digit increase in dividends, the company will continue to return large amounts of cash to shareholders, keeping the trend of returning large amounts of cash to shareholders intact.