The Ibex 35 continues to be a dividend index; this is the preferred remuneration formula for its listed companies. However, over the last two years, The members of the Spanish selective have also accelerated the repurchase and amortization of own shares. This is another form of shareholder remuneration, traditionally much more used in the United States, but which arrived in Europe a few years ago.
And in Spain, its implementation is proceeding at a good pace. According to data published this Tuesday by the Spanish Stock Exchange and Market Research Service (BME), only between January 2022 and June 2024, the volume amortized by Spanish listed companies exceeds that of the entire previous decade, approaching 37.5 billionThis figure must be put into perspective: during the same period, Spanish listed companies distributed almost 76 billion dollars in dividends, which, as they say, continue to be the protagonists.
Amortization plans have been promoted by large listed companies, especially banks. This year, until June, the selective companies have made depreciations of 7,590 million euros, 6.6% more than in the same period of 2023. Another of the derivatives of this current remuneration is that the Ibex companies closed 2023 with a level of own shares of 1.03% of its capitalization, the second highest figure in the last six years, and that at the end of the first half of the year this value had risen to 1.69%, the highest figure since at least 2017.
“The increase in treasury shares recorded in the first half of 2024 is mainly driven by the buybacks made by BBVA, Santander, CaixaBank And Sabadellthat they have disbursed from January 2023 to June 2024 approximately 7.170 million euros to buy back their own shares,” the study highlights. Since 2022, the major Spanish banks have announced major share buyback and write-off plans that they are gradually implementing, and the financial sector has already collected 47% of the 12.8 billion written off by Ibex. companies in 2023.
What are the advantages for the shareholder of this method of remuneration? “The buyback and redemption of shares has a first and slight direct remuneration effect for shareholders. During the period in which treasury shares remain in the companies’ treasury shares, they do not receive a dividend if the company distributes one, which leads to an increase in the proportion of remuneration received by the outstanding shares that are not part of treasury shares. If, in addition, these shares are eventually redemption, some empirical work shows this. stock market performance companies that practice this form of remuneration slightly outperforming the overall market,” is detailed in the study.
