24/7 Wall St: More Buybacks on the Way, but Are Dividends Better for Shareholders?
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Until the Inflation Reduction Act that was enacted last month, corporate stock repurchase announcements had fallen off a cliff in 2022. The new law subjects corporations to a 1% excise tax on stock buyback plans announced in 2023 and thereafter.
Companies have reacted predictably by announcing a wave of new buyback programs to get in under the existing regime. Johnson & Johnson (NYSE: JNJ) on Wednesday announced a $5 billion stock buyback plan that has no time limit and may be suspended or discontinued at any time. The company may buy back its stock in either an open market or privately negotiated transaction.
Independent oil and gas producer APA Corp. (NYSE: APA) added 40 million shares to an existing buyback program. APA repurchased 7 million shares at an average price of $42.59 in the June quarter and an additional 6.9 million shares in July at an average price of $33.87 per share. The company also doubled its annual dividend to $1.00 per common share.