Buyback yield
ValuationDefinition
Net dollars spent on stock buybacks divided by market cap, expressed as a percentage. Treated similarly to dividend yield in shareholder yield analysis.
S&P 500 long-run buyback yield: ~2-3%/year. Combined with dividend yield (~1.5%), shareholder yield is ~4%. Buybacks at discounts to intrinsic value create real shareholder value; at premiums (peak markets) they destroy it.
S&P 500 long-run buyback yield: ~2-3%/year. Combined with dividend yield (~1.5%), shareholder yield is ~4%. Buybacks at discounts to intrinsic value create real shareholder value; at premiums (peak markets) they destroy it.
Formula
Buyback yield = Net buybacks / Market cap