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Share buybacks used to be something of a US phenomenon, like baby showers and Halloween. But like those traditions, they have crossed the Atlantic and taken hold. According to research by Janus Henderson, the value of UK buybacks almost tripled between 2021 and 2022 to $70.5bn (£56.5bn). This wasn’t an anomaly: since 2016, payouts have increased more than seven-fold.
A similar pattern can be seen globally. Every region and almost every sector has increased its use of buybacks, which have tripled in value since 2012. Around the world, they now amount to 94 per cent of dividends, compared with little over 50 per cent a decade ago, as per Janus Henderson.
The question is: are investors benefiting? Or are there better uses of company cash?