S&P 500 Buybacks Set a Record. Here're 3 Things You Need to Know.

Warren Buffett offered a full-throated defense of share buybacks in his annual letter to Berkshire Hathaway shareholders, saying stock purchases by Berkshire and the dozens of publicly traded companies it owns are a boon to investors. The impact of buybacks on stock prices has always been a hotly debated topic, and here's what you need to know about S&P 500 stock buybacks:

S&P 500 Q4 2022 buybacks were $211.2 billion, up 0.2% from Q3 2022's $210.8 billion, as 2022 sets an annual record at $922.7 billion, up from 2021's $881.7 billion. Buybacks remained heavy, with the top 20 companies accounting for 45.7% of Q4 2022 buybacks, according to S&P press release.

Since the first quarter of 2009, cumulative S&P 500 constituent stocks' buybacks have reached US$7.8 trillion, equivalent to three times Apple's market capitalization.

Breaking down the S&P 500 return from 2011, 27% of the return was driven by share buybacks, 57.3% by earnings and the remaining 9.1% and 6.1% were driven by dividends and P/E multiple expansion respectively, according to PGM Global.