- The value of the treasury stock of the companies in the Spanish selective index amounted to 1.69% of their total capitalization up to June, compared to 1.03% at the end of 2023
- Between January 2022 and June 2024 alone, the volume redeemed by Spanish listed companies exceeds that of the entire previous decade, approaching 37.5 billion euros
Spain's large listed companies continue to increase their treasury stock and the pace of their share redemption plans. This is confirmed by the report published today by BME's Research Department, which analyses data from last year and the end of the first half of 2024. IBEX 35® companies ended last year with a level of treasury stock representing 1.03% of their total market capitalization, the second highest figure in the last six years. This value has grown to 1.69% of capitalization in the first half of 2024.
The data confirm the upward trend of large listed companies, especially banks, to continue to exercise share redemption plans at a high rate. Up to June of this year, the companies that form part of the Spanish selective index have made redemptions of 7,590 million euros, 6.6% more than in the same period of 2023.
The increase in treasury shares in the first half of the year is mainly due to buybacks by BBVA, Santander, CaixaBank and Sabadell. These four listed banks paid out nearly 7.17 billion euros between January and June. The financial sector is also at the forefront of announcements by the major listed companies regarding future share redemption plans. Last year, banks accounted for 46.6% of the 12,759 million euros redeemed by all IBEX 35® companies. This was followed by the oil and energy sector (30.2%).
The practice of share redemptions, historically well established in the United States, burst onto the European stock markets a few years ago. In Spain, between January 2022 and June 2024, listed companies redeemed shares for almost 37,500 million euros, while in the previous 10 years, the amount redeemed was close to 32,000 million. In other words, in two and a half years, more shares have been redeemed than in the whole of the previous decade.
Despite this increase in share redemptions, the preferred form of shareholder remuneration for Spanish listed companies continues to be the distribution of dividends. In the first half of the year, the amount of dividends paid to shareholders by listed companies as a whole grew to 19,596 million euros, 34.4% more than in the same period of 2023.
As the report explains, share buybacks and redemptions have a first, small, direct payout effect for shareholders. During the period in which treasury shares remain in companies' treasury portfolios, they do not receive a dividend if the company distributes it, which leads to an increase in the proportion of remuneration received by the outstanding shares that are not part of the treasury stock. Although the effect on the long-term differential return of shares of companies that buy back and redeem versus those that do not is not conclusive, there is a growing consensus that they are a flexible capital management and allocation tool that can deliver value to shareholders.
You can find the full report here (only in spanish version).
