AsianFin -- Share buybacks by U.S. companies surged to a record $165.63 billion in July, up 88% from the previous high set in July 2007, bringing year-to-date buybacks to $926.1 billion, or about $108 billion above the previous 2022 record, according to new data from Birinyi Associates. 

Corporate America remains one of the largest buyers of U.S. equities and continues to signal confidence in their businesses, despite ongoing tariff concerns, Birinyi noted.

The sectors leading buyback activity this year are financials, technology, and communication services, collectively accounting for $689 billion in repurchases. Utilities, by contrast, have been the most conservative.

As markets climbed to records, several major buyback announcements were made in July, including JPMorgan's $50 billion buyback following eased capital requirements for large banks. Bank of America and Morgan Stanley followed with $40 billion and $20 billion programs, respectively. In the third quarter, Meta ($10.6 billion), Alphabet ($13.6 billion), and Microsoft ($4.5 billion) also stood out.

However, this renewed focus on buybacks may be coming at the expense of dividends. According to Deutsche Bank strategist Jim Reid, S&P 500 dividend yields are now just 20 basis points above their all-time lows, last seen during the 2000 tech bubble.

Reid cautioned that buybacks often peak during market highs, potentially putting shareholder capital at risk. Buybacks tend to occur more at market tops than bottoms, meaning companies often buy high, not low, he said.

He also outlined three key risks for investors: buybacks are highly discretionary and may be cut in downturns, they boost earnings per share without necessarily reflecting real profit growth, and they may divert funds away from business investment or be used to support executive compensation targets.