Stock buybacks are an important way in which corporate management teams look to return value to their shareholders. A stock buyback reduces the number of outstanding shares of a company in the market. Since there are fewer shares, the company’s earnings per share rise, all other things remaining equal. Markets often view buybacks as a vote of confidence in a company’s direction, because they reflect an investment the company is making in itself.
Buybacks that drive up stock prices also provide more flexible tax returns than dividends. Dividends paid by US corporations are usually taxed at the same rates as long-term capital gains. However, investors must pay taxes on dividend income when they earn it. Investors do not have to pay capital gains taxes until they sell. This allows for deferment of tax payment.
This means that investors can keep their money invested for a longer period, rather than sending it to Uncle Sam. This will likely result in greater and compounded returns. Below, I’ll look at three US companies that have just announced significant, and in some cases huge, buyback programs. All market cap, returns, and implied upside numbers are as of the December 30 close.
GE Vernova: Electrification of the world and the possibility of a return through share buybacks
J. Vernova today
(As of 12/30/2024 at 05:46 PM ET)
- 52 week range
- $115.00
▼
$357.09
- Dividend yield
- 0.30%
- Price target
- $314.35
J Vernova New York Stock Exchange: JeffGiant energy and electrical equipment, Just announced a major buyback license Worth $6 billion. The stock has been on a tear since it was spun off from former parent company General Electric. A 152% return in 2024 isn’t too bad. The buyback authorization now represents just under 7% of the company’s market capitalization.
At the same time, the company announced its first dividend of $0.25 per share. The company’s dividend yield is just 0.3%. But it’s a good sign to see it providing income to shareholders so early in its history as an independent entity. The company was a favorite of Wall Street analysts. On average, they raised their price targets as news and earnings reports emerged. GE Vernova recently announced that it has signed deals to power data centers using its natural gas turbines. This is a source of investor optimism and a long-term upward trend.
Match Set: Swipe right on dividends, buybacks, and AI capabilities
Group match today
(As of 12/30/2024 at 05:45 PM ET)
- 52 week range
- $27.66
▼
$42.42
- Dividend yield
- 2.32%
- P/E ratio
- 14.64
- Price target
- $37.68
Group match Nasdaq: MTH Also only Announced a major buyback license. Its market capitalization is more than twice the size of GE Vernova. The repurchase license obtained by the company, worth $1.5 billion, is equivalent to 18% of its market value. Like GE Vernova, the company also announced the start of its stock dividend. If distributed annually, the company’s quarterly dividend of $0.19 per share gives it a dividend yield of 2.3%.
When it comes to revenues in 2024, that’s where the similarities to GE Vernova end. Shares fell 10%. In it Last investor dayThe dating app company has come up with its plan to shake things up. Unsurprisingly, this includes the use of artificial intelligence. The company is applying artificial intelligence to help people find more matches and turn matches into real connections. This includes implementing chatbot-like features that help users come up with better responses and move the online conversation to an actual date. It will be interesting to see if these new features can revive revenue growth that hit less than 2% last quarter.
Olin: Material stock with huge buyback announcement and 30% rise
I was today
(As of 12/30/2024 at 05:30 PM ET)
- 52 week range
- $32.90
▼
$60.60
- Dividend yield
- 2.41%
- P/E ratio
- 26.73
- Price target
- $50.14
Olin New York Stock Exchange: OLN It is a lesser known name, however Recent stock repurchase authorization It is only small. The $2 billion mandate was recently increased from $700 million. With a market capitalization of just under $3.9 billion, licensing represents approximately 52% of the company’s value. Basic materials stocks did not perform well in 2024, delivering a total return of -38%. However, like Match Group, Investor day for the company She explained how she plans to get back on the right side of the market.
The company manufactures several products, including chlorine-epoxy and Winchester firearms ammunition. The company is not focused on aggressive revenue growth. It expects these broad markets to grow 3% to 6% annually over the next five years. Instead, the company aims to achieve structural write-downs of $250 million by 2028. It also plans to return more than 50% of its operating cash flow to shareholders through 2029. Wall Street sees great value in this stock. The average December price target from Citigroup and Barclays suggests a 33% upside for the shares.
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