“While academics might claim that investors should be indifferent between stocks that pay a dividend and those that buy back shares, fund providers know that investors like the allure of dividend funds. But there is good reason to pay attention to firms that reduce their shares outstanding,” said Morningstar analyst Michael Rawson in a report on buyback ETFs.
The analyst recommended PKW, which earned Morningstar’s highest rating “by seeking stocks that have bought back 5% or more of its shares outstanding in the previous year.” [ETF Spotlight: Buybacks and Share Repurchases]
Wall Street darling Apple (NasdaqGS: AAPL) earlier this month announced a $2.65-a-share dividend as well as a stock buyback plan. [Nasdaq-100 ETF Rises on Apple Dividend]
Separately, several U.S. banks recently announced dividend hikes and share repurchase plans after passing the Federal Reserve stress tests. [Bank ETFs Juiced by Dividends, Share Buybacks]
PKW is up 10.9% year to date, while the S&P 500 has advanced 13.2%, according to Morningstar.
PowerShares Buyback Achievers
