7 High-Potential Stocks With Share Buybacks and Dividends

When publicly traded companies are feeling confident and flush with cash, they tend to reward shareholders with increased dividend payments and stock buybacks. In April, CNBC noted that share repurchases in 2023 were nearing a record pace at close to $1 trillion. And plenty of companies have increased their dividend payouts this year. Today, we’ll look at seven companies showing major signs of confidence.

Rising dividends and share buybacks are good signs for the economy, as they signal confidence in companies’ current earnings and future outlook. Moreover, these shareholder rewards help carry investors through times of prolonged volatility.

Here are seven stocks with share buybacks and dividends that are on the rise that investors should consider adding to their portfolios.

Delta Air Lines (DAL)

Source: Markus Mainka / Shutterstock.com

Delta Air Lines (NYSE:DAL) suspended its dividend in March 2020 as the Covid-19 pandemic sent the global aviation industry into a tailspin. Delta wasn’t alone in this, as suspending dividend payments and share buybacks were conditions of the $54 billion in aid the federal government provided the industry during the pandemic.

However, on June 15, the airline announced it was reinstating its dividend. Delta will pay a quarterly dividend of 10 cents per share on Aug. 7 to shareholders of record as of the close of business on July 17, making its ex-dividend date July 14. This gives shares a forward annual yield of 0.9%.

Delta follows Southwest Airlines (NYSE:LUV), which was the first major carrier to restart its dividend earlier this year. Meanwhile, American Airlines (NASDAQ:AAL) has yet to reinstate its dividend payment, and United Airlines (NYSE:UAL) and JetBlue Airways (NASDAQ:JBLU) don’t pay dividends.

With demand for air travel rising, DAL stock has gained nearly 30% this year and is trading near its 52-week high.

Shell (SHEL)

logo on a gas station in Iceland.

Source: JuliusKielaitis / Shutterstock.com

British oil giant Shell (NYSE:SHEL) just raised its quarterly dividend by 15% to around 33 cents per share and announced plans to buy back at least $5 billion in shares during the second half of 2023. The company also said it will allocate 30% to 40% of its free cash flow from operations to rewarding shareholders, up from 20% to 30% previously.

This is certainly a sign of confidence from the oil major and comes on the heels of the company announcing record annual profits of almost $40 billion last year.

Investors also cheered the news that Shell no longer plans to cut its oil production by 20% by 2030. The company now says it will keep its oil production steady through the remainder of the decade and grow its natural gas business to strengthen its position as the world’s largest liquefied natural gas (LNG) producer.

SHEL stock is up 7% year to date and could continue to run if energy prices trend higher. In the meantime, investors can collect its freshly raised dividend.

Apple (AAPL)

An Apple MacBook Air laptop sitting under bright purple lights.

Source: WeDesing / Shutterstock.com

Apple (NASDAQ:AAPL) used its most recent earnings print to announce that it is raising its quarterly dividend payment by 4% to 24 cents per share. The latest increase marks the 11th year in a row that Apple has lifted its dividend payment to shareholders and brings its forward annual yield to 0.5%.

The company also announced a new $90 billion stock buyback program, which is in line with previous share repurchases. According to Bloomberg, Apple has spent more on share buybacks than any other publicly traded U.S. company, to the tune of $550 billion over the past 10 years.

In this year’s first quarter alone, Apple spent $23 billion on dividends and share repurchases. The consumer electronics company’s latest earnings clearly gave it the confidence to bolster its dividend payout and recommit to its share buyback program. Apple reported earnings per share (EPS) of $1.52 compared to an expected $1.43. Revenue of $94.8 billion was down 3% year over year but also exceeded the consensus estimate.

In addition to handsomely rewarding shareholders through dividends and share repurchases, AAPL stock is up 42% year to date.

Dick’s Sporting Goods (DKS)

Exterior of Dick's Sporting Goods retail store including sign and logo.

Source: George Sheldon via Shutterstock

Dick’s Sporting Goods (NYSE:DKS) said it was more than doubling its quarterly dividend after announcing blowout earnings in March. The sports equipment retailer hiked its quarterly payout to $1 a share, up from around 49 cents previously, for a yield of 2.2%.

Management said the company achieved record sales in 2022 despite inflationary pressures and a slowing economy. Consumers, it seems, continue to invest in sports equipment for themselves and their kids.

News of the dividend increase and strong earnings helped push DKS stock to a record high in early March. While the share price has pulled back some since then, it is up 13.5% this year and 85% over the past 12 months.

Moreover, the company continues to outperform on the earnings front. Dick’s announced Q1 earnings that again beat Wall Street expectations and reaffirmed its full-year guidance. The company reported net income of $305 million, up 17% year over year, and a 5.3% increase in sales to $2.8 billion.

Chevron (CVX)

Chevron (CVX) on a gas station roof.

Source: Denis Kuvaev / Shutterstock.com

U.S. oil major Chevron (NYSE:CVX) announced a new $75 billion stock buyback program earlier this year and boosted its dividend payment to $1.51 per share, up 6%, for a yield of 3.9%.

The new stock buyback program began in April of this year and has no expiration date. Furthermore, the latest buyback amount represents more than 20% of the company’s outstanding stock and is more than double the previous $25 billion buyback plan the company initiated in 2019.

The company is clearly rewarding shareholders after an exceptional year. With crude oil prices elevated throughout most of 2022, Chevron reported more than $37.6 billion of free cash flow and net income of $35.5 billion. for last year. While the price of crude oil has come back down to earth this year, Chevron has made it a point to share its earnings windfall with stockholders.

CVX stock is down nearly 14% in 2023 and up just 4.4% in the past 12 months, but the dividend and stock buybacks are worthy compensation.

Berkshire Hathaway (BRK-A, BRK-B)

A close-up of a Berkshire Hathaway (BRK-A, BRK-B) office in Terra Haute, Indiana.

Source: Jonathan Weiss / Shutterstock.com

Berkshire Hathaway (NYSE:BRK-A, BRK-B) doesn’t pay a dividend. However, the holding company of legendary investor Warren Buffett certainly isn’t shy about repurchasing its own stock.

Between 2020 and 2022, Berkshire bought back $60 billion of its own shares. It followed that up this year by repurchasing nearly $2 billion of its stock during Q1. Buffett himself has vigorously defended the practice of stock buybacks, saying it increases shareholder ownership without requiring investors to spend a cent.

One of the reasons Apple is Berkshire Hathaway’s largest stock holding is likely because the company repurchases more of its stock than any other publicly traded concern.

Buffett says he tends to buy back Berkshire stock whenever he feels it is undervalued, or when he can’t find other places to put the company’s enormous cash pile to work in the market. Berkshire reported in May that it has $130 billion in cash on hand — money that Buffett won’t hesitate to use to repurchase the company’s stock.

UnitedHealth Group (UNH)

The UnitedHealth (UNH) headquarters in Minnetonka, Minnesota.

Source: Ken Wolter / Shutterstock.com

Health insurance provider UnitedHealth Group (NYSE:UNH) announced in early June that it was increasing its quarterly dividend by 14% to $1.88 per share, giving it a yield of 1.5%. The news arrived as UnitedHealth announced record revenue for this year’s first quarter.

The company, which is one of the largest health insurance companies in the U.S., reported EPS of $6.26 a share, up 14% year over year and beating estimates by 13 cents. Revenue of $91.9 billion was up nearly 15% from a year earlier. Insurance premiums at UnitedHealth rose 13.6% to $72.79 billion in the quarter, while it added more than a million new customers.

UnitedHealth has now grown its quarterly dividend by more than 500% over the past decade. Few other companies have hiked their payout to shareholders as aggressively as this one.

While UNH stock is down 10% on the year, it has proven to be a long-term winner for investors, posting a five-year gain of 87%.

On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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