Buyback yield

Capital returns

Cash spent repurchasing shares over the latest fiscal year as a percentage of market cap.

Formula

Buyback yield = share repurchases (latest fiscal year) ÷ market cap

Why it matters

Buybacks return cash by shrinking the share count, so each remaining share owns a larger slice of the same business. Unlike dividends they are tax-deferred for continuing holders, and unlike dividends their value depends on price: repurchasing undervalued shares transfers wealth to remaining shareholders, repurchasing overvalued shares destroys it. A consistent buyback yield at reasonable valuations is one of the strongest quiet compounding forces in markets.

What good looks like

2–5% a year sustained over many years, at sensible prices, is excellent. The key check is whether the share count actually falls (see share count change 5y) — gross buybacks that merely offset stock-compensation issuance return nothing to owners. Buybacks funded by debt at high valuations are the worst version of the tool.

Caveats

This measures gross repurchases, not the net reduction in shares; companies with heavy SBC can spend billions on buybacks while the share count stays flat. Buyback spending is also the most cyclical form of capital return — many companies buy heavily at market tops and stop at bottoms, exactly backwards. Judge the price sensitivity of the program, not just its size.