Why are share buybacks on the rise?
Share buybacks are on the rise as global dividend payouts hit a milestone

Global dividend payouts hit a first-quarter record of $339.2 billion in the first three months of the year, according to the Janus Henderson Global Dividend index. UK dividend growth, however, was “relatively pedestrian”, says Andrew Jones of Janus Henderson.
Dividends rose 2.4% on an underlying basis to $15.3 billion. Ordinary (ie, not special, one-off payments) dividends are forecast to come in at £79.7 billion this year, still 6.5% below the all-time high of £85.2 billion paid out in 2018, says Russ Mould of AJ Bell.
Brexit, the pandemic and surging inflation have all taken their toll on UK plc. Instead, buybacks are growing in popularity. The FTSE 100’s forecast ordinary dividend yield is 3.8% this year, but that rises to 5.3% when you factor in buybacks already announced.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Buybacks are more flexible for boardrooms than dividends, notes James Gard for Morningstar. As Paul Schultz of the University of Notre Dame puts it, a dividend reflects “a company’s capital discipline, its respect for small investors, and its prudence”. But many British blue chips slashed payouts during Covid – there was a 44% drop in 2020 compared with 2019.
While understandable, trust in promises, once broken, can be difficult to restore. “Share buybacks are more prevalent in the UK than we’ve ever seen before,” Nick Shenton of Artemis Income tells Hargreaves Lansdown. Since the start of 2021, BP has reduced its share count by 17%; Barclays is down 14%.
A common argument for buybacks is that the shares are undervalued. True, “asking a company’s CEO whether their shares are undervalued is akin to enquiring of your local car dealer whether it’s time for an upgrade – you shouldn’t expect an unbiased opinion”. But with British shares trading at historically low levels, this time “we are inclined to agree with the CEO”.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
Which investments can I hold in a stocks and shares ISA – and which ones are banned?
HMRC has a list stating which investments are allowed in ISAs, but sometimes investors, and even ISA providers, get confused by the rules. Here’s what you need to know when picking your investments.
By Ruth Emery
-
Review: Andronis Minois and Andronis Arcadia – two Greek island idylls
Travel Andronis Minois on Paros and Andronis Arcadia on Santorini are two beautiful, authentic hotels on two different islands in Greece
By Nicole García Mérida
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocks
Opinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
By Cris Sholto Heaton
-
BP's 'long, painful decline' – and why next year could be even tougher
Opinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
By Matthew Lynn
-
Investment trusts tap the profits in exotic and obscure global markets
Opinion Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money
By Peter Walls
-
Falling revenues and mounting debt spell trouble for Jumia Technologies
Struggling African e-commerce platform Jumia Technologies looks headed for the exit, says Dr Matthew Partridge.
By Dr Matthew Partridge
-
Next reports £1 billion in annual profits for the first time – what's next for the retailer?
Clothing retailer Next has become only the fourth member of its sector to surpass £1 billion in annual profits. What does this mean for the company's future?
By Dr Matthew Partridge
-
Best of British bargains: cash in on undervalued companies in the UK stock market
Opinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
By Michael Field
-
Building firm Keller presents low debt and ample scope for growth
Geotechnical contractor Keller, which supports vital global infrastructure, boasts rising profits and a cheap valuation
By Dr Mike Tubbs
-
PZ Cussons share price down 75% in last decade – why it's one to watch
Opinion Once-strong consumer-goods business PZ Cussons is out of favour with the market. That spells opportunity for investors, says Jamie Ward
By Jamie Ward