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Buyback announcements by U.S. companies reached a record level in the fourth quarter of 2021. There were share repurchases worth $270.1 billion, up 15.1% from Q3 2021's record $234.6 billion expenditure and up 106.8% from $130.6 billion in Q4 of 2020, going by the data from S&P Dow Jones Indices.
As many as 325 companies announced share repurchase of at least $5 million in the quarter, up from 309 in Q3 of 2021 and 244 in Q4 of 2020. Apple led the way with its $23.4-billion buyback, up 14.3% from $20.4 billion in Q3 of 2021. Other companies that trailed Apple were Meta (FB), Alphabet (GOOGL), Bank of America (BAC) and Microsoft (MSFT).
In short, Technology (with about $74.9 million and taking up 27.7% of the total S&P 500 buyback) and Financials ($51.5 million worth of buyback and making up about 19.1% of the total) took the best two spots in the buyback. Communication Services (about $43.3 million and 16.0%), Consumer Discretionary ($30.9 million and 11.4%) and Healthcare (about $21.8 million and 8.1%) took the next three spots.
Not only buybacks, but dividend payments were also strong. The S&P 500’s Q4 2021 dividends increased 3% to a record $133.9 billion from Q3 2021's $130.0 billion and were 10.1% higher than $121.6 billion recorded in Q4 of 2020. For 2021, dividends were a record $511.2 billion, up 5.8% year over year. Total shareholder return on buybacks and dividends was a record $404.0 billion in Q4 2021, up 10.8% sequentially and 60.2% year over year.
ETFs in Focus
Against this backdrop, investors can keep an eye on the following buyback ETFs.
The underlying Morningstar US Dividend and Buyback Index is composed of U.S. stocks with a history of dividend payments and/or share buybacks. The fund charges 25 bps in fees.
The product looks to track companies that have implemented a net reduction of 5% or more in shares outstanding in the last 12 months. The fund charges 64 bps in fees.
The underlying Technology Select Sector Index includes companies from the following industries: computers & peripherals; software; diversified telecommunication services; communications equipment; semiconductor & semiconductor equipment; internet software & services; IT services; wireless telecommunication services; electronic equipment & instruments; and office electronics. The Zacks Rank #1 (Strong Buy) fund charges 10 bps in fees.
The underlying Financial Select Sector Index seeks to provide an effective representation of the financial sector of the S&P 500 Index. This Zacks Rank #1 ETF XLF charges 10 bps in fees.
Communication Services Select Sector SPDR ETF (XLC - Free Report)
The underlying Communication Services Select Sector Index seeks to provide an effective representation of the communication services sector of the S&P 500 Index. This Zacks Rank #3 (Hold) fund charges 10 bps in fees.
The underlying Consumer Discretionary Select Sector Index seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index. This Zacks Rank #2 ETF XLY charges 10 bps in fees.
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ETFs to Tap Record S&P 500 Buybacks in Q4
Buyback announcements by U.S. companies reached a record level in the fourth quarter of 2021. There were share repurchases worth $270.1 billion, up 15.1% from Q3 2021's record $234.6 billion expenditure and up 106.8% from $130.6 billion in Q4 of 2020, going by the data from S&P Dow Jones Indices.
As many as 325 companies announced share repurchase of at least $5 million in the quarter, up from 309 in Q3 of 2021 and 244 in Q4 of 2020. Apple led the way with its $23.4-billion buyback, up 14.3% from $20.4 billion in Q3 of 2021. Other companies that trailed Apple were Meta (FB), Alphabet (GOOGL), Bank of America (BAC) and Microsoft (MSFT).
In short, Technology (with about $74.9 million and taking up 27.7% of the total S&P 500 buyback) and Financials ($51.5 million worth of buyback and making up about 19.1% of the total) took the best two spots in the buyback. Communication Services (about $43.3 million and 16.0%), Consumer Discretionary ($30.9 million and 11.4%) and Healthcare (about $21.8 million and 8.1%) took the next three spots.
Not only buybacks, but dividend payments were also strong. The S&P 500’s Q4 2021 dividends increased 3% to a record $133.9 billion from Q3 2021's $130.0 billion and were 10.1% higher than $121.6 billion recorded in Q4 of 2020. For 2021, dividends were a record $511.2 billion, up 5.8% year over year. Total shareholder return on buybacks and dividends was a record $404.0 billion in Q4 2021, up 10.8% sequentially and 60.2% year over year.
ETFs in Focus
Against this backdrop, investors can keep an eye on the following buyback ETFs.
iShares U.S. Dividend And Buyback ETF (DIVB - Free Report)
The underlying Morningstar US Dividend and Buyback Index is composed of U.S. stocks with a history of dividend payments and/or share buybacks. The fund charges 25 bps in fees.
Invesco Buyback Achievers Portfolio (PKW - Free Report)
The product looks to track companies that have implemented a net reduction of 5% or more in shares outstanding in the last 12 months. The fund charges 64 bps in fees.
Technology Select Sector SPDR ETF (XLK - Free Report)
The underlying Technology Select Sector Index includes companies from the following industries: computers & peripherals; software; diversified telecommunication services; communications equipment; semiconductor & semiconductor equipment; internet software & services; IT services; wireless telecommunication services; electronic equipment & instruments; and office electronics. The Zacks Rank #1 (Strong Buy) fund charges 10 bps in fees.
Financial Select Sector SPDR ETF XLF
The underlying Financial Select Sector Index seeks to provide an effective representation of the financial sector of the S&P 500 Index. This Zacks Rank #1 ETF XLF charges 10 bps in fees.
Communication Services Select Sector SPDR ETF (XLC - Free Report)
The underlying Communication Services Select Sector Index seeks to provide an effective representation of the communication services sector of the S&P 500 Index. This Zacks Rank #3 (Hold) fund charges 10 bps in fees.
Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report)
The underlying Consumer Discretionary Select Sector Index seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index. This Zacks Rank #2 ETF XLY charges 10 bps in fees.