These 3 Stocks Recently Increased Both Their Dividends and Stock Buybacks

These 3 stocks recently hiked their dividends and also their share buyback programs. In effect, they are increasing their capital returns to shareholders. That might have a beneficial effect on their stock prices over the long term. They are American Express Company (AXP), Suncor Energy (SU), and Phillips 66 (PSX).

American Express (AXP)

For example, American Express Company just announced on March 8 that it had increased its quarterly dividend by 15% to the equivalent of an annual rate of $2.40 per share. That gives the stock an annual dividend yield of 1.39% based on its price of $172.12.

In addition, the company also said that it would repurchase 120 million of its shares outstanding. This is up from the remaining 36.4 million shares it could buy back under its existing share buyback authorization. That program was initiated on Sept. 23, 2019, also for 120 million shares. 

Since the company now has 744.19 million shares outstanding, the 120 million buyback program will reduce its share count by 16.1%. However, it could take several years for this to occur, based on its prior authorization and purchases. It is estimated that American Express will buy back about 24 million shares per year.

This means that the company will reduce its share count by about 20% of the 120 million each year, and suggests that the buyback yield is 3.22% (i.e., 24/722.19m). In other words, shareholders will gain a total yield of 4.61%. This is because the 1.39% dividend yield added to the 3.22% buyback yield works out to 4.61%.

No wonder this is one of Warren Buffett's biggest holdings in Berkshire Hathaway (BRK.B).

Suncor Energy (SU)

Suncor Energy (SU), the Canadian oil sands producer, declared a 23.8% hike in its dividend on February 14, bringing it to the U.S. dollar equivalent of $1.5288. At $33.71 on March 9, this gives the stock a 4.535% dividend yield, which makes the stock very attractive to value investors.

Moreover, the company recently announced that its share buyback program could buy back up to 10% of its shares over the next 12 months. That gives investors in the stock a total yield of over 14.5% if the company follows through on the share repurchase program.

And there is every indication that it will do so. In 2022, the company repurchased a record 116.9 million common shares at an average price of $43.92 per common share, or the equivalent of 8.1% of its common shares as of December 31, 2021. 

Phillips 66 (PSX)

Phillips 66 (PSX) recently hiked its dividend by 8% to $4.20 per share annually. This gives PSX stock, which closed at $101.14 on March 9, a dividend yield of 4.15%. 

Moreover, Phillips 66 announced a huge increase in its buyback program by $5 billion. Here is what the company's CEO, Mark Lashier, said about the two programs:

“We have increased the dividend 12 times since our inception in 2012, resulting in a 17% compound annual growth rate. This dividend increase and our share repurchase program support our commitment to return $10 billion to $12 billion to shareholders by year-end 2024.”

Given that the company has a market capitalization of $46 billion, these shareholder capital returns represent a total yield to them of 21.7% to 26%. These could also give a boost to the stock price over the long term, as shareholders enjoy these returns.

The bottom line here is that these three stocks present good opportunities for investors to receive benefits from ample dividend and share buyback returns from these three stocks.

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