Buyback Bonanza: The Top 7 ETFs to Profit From Corporate Cash Splurges


  • Invesco BuyBack Achievers ETF (PKW): PKW targets companies with significant share repurchases, offering potential for enhanced EPS.
  • iShares U.S. Dividend and Buyback ETF (DIVB): DIVB combines dividend payments and buyback strategies for long-term growth and income.
  • Schwab U.S. Dividend Equity ETF (SCHD): SCHD focuses on dividend-paying companies with a history of buybacks, providing stability and potential returns.
  • Keep reading for the complete list of buyback ETFs to buy!
Buyback ETFs - Buyback Bonanza: The Top 7 ETFs to Profit From Corporate Cash Splurges

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80% of S&P 500 companies are entering pre-earnings buyback blackouts, according to Bloomberg. Analysts anticipate a potential rebound post-blackout. Historically, corporate buybacks have bolstered stock prices, and their temporary suspension, noted by Deutsche Bank, could lead to increased market volatility until early May. This backdrop has led to this list of Buyback ETFs to consider.

Additionally, this period might also witness a rotation into sectors that investors believe will benefit most during an upturn, Bloomberg noted, with recent breakouts in economically sensitive industries like semiconductors, homebuilders, and transportation.

I think that now could be a good time to put these buyback ETFs on one’s watchlist. I feel that these ETFs could then be in an undervalued spot right now, given people’s attention is either towards growth assets or holding off due to fears of shares and ETF units as being overpriced.

So with that being said, here are seven buyback ETFs for investors to consider scooping up for April.

Buyback ETFs: Invesco BuyBack Achievers ETF (PKW)

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Invesco BuyBack Achievers ETF (NASDAQ:PKW) includes companies that have executed a 5% or higher share repurchase in the past year. This ETF has shown significant long-term outperformance compared to broader market indices, gaining 62.89% over the past five years. It has an expense ratio of 0.62%.

The overall strategy of PKW is to boost one’s exposure to companies improving their EPS. This is a common theme among the other buyback ETFs, as this is a signal that their shares could be potentially undervalued.

The ETF includes several significant holdings. T-Mobile (NASDAQ:TMUS) is one of the largest holdings, representing 4.72% of the ETF’s composition. Following closely is Booking Holdings (NASDAQ:BKNG), which accounts for 4.52% of the fund. Johnson & Johnson (NYSE:JNJ) also plays a substantial role in the ETF with a 4.45% share. Comcast (NASDAQ:CMCSA) makes up 4.25% of the portfolio, and Lockheed Martin (NYSE:LMT) rounds out the top five with a 4.10% contribution.

iShares U.S. Dividend and Buyback ETF (DIVB)

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iShares U.S. Dividend and Buyback ETF (CBOE:DIVB) invests in U.S. companies with a strong history of dividend payments and share repurchases, providing a mix of income and buyback strategies.

This dual approach helps investors improve capital appreciation as well as income, thus it may be suitable for those with a long time horizon to get the most out of it.

DIVB, as of now, manages assets worth $338.30 million with a very low expense ratio of 0.05%. It boasts a price-to-earnings (P/E) ratio of 16.17 and offers a dividend yield of 2.91% on a dividend of $1.24. Over the past year, the ETF has seen a return of 13.98%. The fund currently holds 410 different assets.

The portfolio includes notable holdings such as Broadcom (NASDAQ:AVGO), which represents 4.90% of the ETF. It is followed closely by Cisco Systems (NASDAQ:CSCO), accounting for 4.77%. Qualcomm (NASDAQ:QCOM) and Texas Instruments (NASDAQ:TXN) hold smaller percentages, contributing 2.88% and 2.87%, respectively. 

Buyback ETFs: Schwab U.S. Dividend Equity ETF (SCHD)

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Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) includes companies with a record of dividend payments and buybacks.

SCHD is one of my favorite dividend and buyback ETFs. The reason being is that it has a great capital return record over the past five years, growing over 40%.

SCHD is a rules-based ETF. Primarily, it focuses on companies that have consistently paid dividends for at least 10 consecutive years. Beyond this, the ETF evaluates firms based on financial health and profitability measures such as return on equity, dividend yield, and dividend growth rate.

SCHD, launched on Oct. 20, 2011, controls substantial assets amounting to $54.46 billion, with a low expense ratio of 0.06%. It offers a dividend yield of 3.48% from a total dividend of $2.67, reflecting a payout ratio of 50.69%.

SCHD includes Chevron Corporation (NYSE:CVX), which constitutes 4.16% of its portfolio. Following Chevron, TXN makes up 4.11% of the fund. LMT is also a significant holding, accounting for 4.10% of the ETF’s total assets.

AdvisorShares Dorsey Wright ADR ETF (AADR)

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AdvisorShares Dorsey Wright ADR ETF (NASDAQ:AADR) holds ADRs of non-U.S. companies that engage in aggressive buyback activities. 

The ETF, launched on July 20, 2010, has accumulated assets totaling $26.41 million and holds 39 different investments. It has a high expense ratio of 1.10% and a P/E ratio of 14.45. The fund has demonstrated significant growth with a 1-year return of 27.01%. It offers a modest dividend yield of 0.71%.

AADR could be one way that investors can diversify their portfolios further through investing in a mix of emerging developed markets outside of the U.S. It gives investors exposure to industries that range from energy in Argentina to financials in Japan with a stake in its largest bank.

The ETF’s portfolio includes Novo Nordisk (NYSE:NVO) with a significant representation of 6.40%. YPF S.A. (NYSE:YPF), another major holding, accounts for 4.70% of the fund. New Oriental Education & Technology (NYSE:EDU) also plays a substantial role, comprising 4.09% of the assets. Mitsubishi UFJ Financial Group (NYSE:MUFG) rounds out the notable entries with a 3.36% stake in the ETF. 

Buyback ETFs: First Trust BuyWrite Income ETF (FTHI)

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Source: First Trust

The First Trust BuyWrite Income ETF (NASDAQ:FTHI) employs a slightly different strategy by combining a buyback approach with an options strategy, specifically covered call writing. This helps to produce income, but the downside is that this comes at the expense of capital appreciation potential, which is par the course for covered call ETFs.

This ETF, established on Jan. 6, 2014, manages assets totaling $573.03 million and has issued 25.42 million shares. It features a relatively high expense ratio of 0.75% and a P/E ratio of 18.59. Notably, it offers a substantial dividend yield of 8.39.

FTHI is heavy with tech stocks as part of its composition. The ETF includes Microsoft (NASDAQ:MSFT) as its largest holding, comprising 7.35% of its portfolio. NVIDIA (NASDAQ:NVDA) also forms a significant part of the fund, accounting for 4.60%. Apple (NASDAQ:AAPL) is another major component, representing 4.40% of the ETF.

Global X SuperDividend U.S. ETF (DIV)

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Although primarily focused on high dividend yields, Global X SuperDividend U.S. ETF (NYSEARCA:DIV) also considers buyback yields in its selection process. This ETF seeks to invest in 50 of the highest dividend yielding equity securities in the U.S.

DIV has assets totaling $606.94 million and 35.76 million shares outstanding. It carries a relatively low expense ratio of 0.45% and features a P/E ratio of 9.11. The fund provides a dividend yield of 7.18% with an annual dividend of $1.21, reflecting a payout ratio of 65.45%.

It’s clear that DIV is suitable for income investors due to its high dividend yield. However, it should be noted that the dividend is more or less all that one can expect from DIV, as the ETF’s share price has dropped 28.66% over the past five years. 

The ETF includes Berry Corporation (NASDAQ:BRY), which accounts for 2.49% of its portfolio. Virtu Financial (NASDAQ:VIRT) also forms a significant part of the fund, comprising 2.36%. Chord Energy (NASDAQ:CHRD) rounds out this selection with a 2.26%.

Invesco International BuyBack Achievers ETF (IPKW)

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Invesco International BuyBack Achievers ETF (NASDAQ:IPKW) also offers exposure to foreign companies engaging in buyback activities.

This ETF, which began on March 6, 2014, manages $89.08 million in assets and has 1.75 million shares outstanding. It features a moderate expense ratio of 0.55% and a P/E ratio of 9.77. The fund provides a dividend yield of 2.44% with an annual dividend of 96 cents, corresponding to a payout ratio of 23.88%. 

The strategy of the ETF seems to work well, having gained 19.54% over the past five years. However, this is substantially below the total returns of both the S&P 500 as well as the Nasdaq.

I think that the time will come when ETFs like IPKW will become outperformers. This could be through a result of overvalued U.S. equities, or when developed and developing economies overseas begin to hit an inflection point where their growth rates far exceed what can be found on U.S. soil. This then makes IPKW one of those buyback ETFs to consider.

On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the Publishing Guidelines.

Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.

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