When it comes to stock buybacks, announcements of new repurchase programs are important to stay aware of. However, announcing a share repurchase program is very different from actually buying back shares. Unlike dividends, when a company announces a share repurchase program, it is not obligated to actually execute it. This is one reason many companies prefer to return capital to shareholders using buybacks rather than dividends. It gives them added flexibility in how they can use the cash on their balance sheets.

Noticing if companies use their buyback capacity is as important as noticing their buyback announcements. One simple and easy metric that measures to what extent a company is buying back shares is the buyback yield. It measures the total value of shares repurchased over a period in relation to a company’s current market capitalization. Below, I’ll look at three stocks that have a strong buyback yield of 10% or more over the past 12 months. This indicates that they have bought back a large amount of shares, providing a significant tailwind to their earnings per share (EPS).

E-commerce giant eBay (NASDAQ:EBAY) has had a robust buyback yield of 10% over the last 12 months. The company has spent over $3.3 billion on buybacks over that period, significantly reducing its outstanding share count. Although this is impressive compared to the less than 2% buyback yield of the S&P 500 Index over the period, it is actually below average for the firm. Over the past 10 years, eBay has shown a consistent commitment to returning capital through buybacks, with an average buyback yield of 12%.

The company’s 12-month buyback pace has been on a steady rise since mid-2023. However, this $3.3 billion clip is still well below the $8 billion peak it reached in Q1 2022. The company also has an above-market indicated dividend yield of 1.6% as of the Mar. 7 close. It recently announced a 7% increase in its quarterly dividend. Its indicated yield is moderately above the 1.2% indicated yield of the S&P 500. Overall, eBay shares have provided an impressive total return over the past 52 weeks of nearly 42%.

Etsy (NASDAQ:ETSY), a significantly smaller e-commerce player compared to eBay, happens to have a significantly higher buyback yield. Its nearly 16% buyback yield over the last 12 months puts it in the top 10 for this metric among mid-cap or larger U.S. stocks. Unfortunately for Etsy, its high level of buybacks hasn’t kept shares from falling. The stock is down nearly 32% over the past 52 weeks as of the Mar. 7 close. During the pandemic, this stock sprang onto the scene, seeing its value nearly 10x from Mar. 2020 to Nov. 2021. Etsy saw several quarters of revenue growth that were over 100%. However, last quarter, revenues grew by barely 1%.

Despite its slow growth, Etsy is in a strong cash position, giving it the ability to buy back shares. It has over $1 billion in cash and generated $315 million in cash from operations last quarter. Given its slow growth, it's worth considering if Etsy is an example of when buybacks are not a good thing. When companies buy back shares, that means they are not investing that cash back into the business. More investment back into the business may have accelerated revenue growth, which may have had a stronger impact on shares. However, Etsy may view its stock as significantly undervalued, making buybacks a strategic use of cash. The company continues investing in product discovery and user experience but may require a more favorable macroeconomic environment for these efforts to yield meaningful returns.