By Ian Salisbury
Stocks with hefty dividend yields have gotten harder and harder to find as more companies use buybacks to distribute extra cash. Fund investors might want to follow their lead.
A new fund, the ProShares S&P 500 Buyback Aristocrats exchange-traded fund, could help them do that. The ETF launches Thursday with the ticker BUYB.
While the S&P 500 is having another strong year, up 7.6% so far in 2026, dividends haven't been a huge part of the picture. The index's dividend yield is just 1%, close to an all-time low. One reason is large U.S. companies tend to prioritize share buybacks over cash payouts these days.
For the 12 months through Sept. 30, 2025, S&P 500 companies spent just over $1 trillion on share repurchases, compared with $665 billion on dividends, according to S&P Dow Jones Indices.
While paying dividends means investors get cash right away, buybacks reduce a company's share count, which tends to boost the share price and doesn't trigger upfront tax bills for investors. A more cynical reason some companies might prefer repurchases: Many CEO bonuses are tied to a company's share price.
The new ProShares S&P 500 Buyback Aristocrats ETF will track an equal-weighted index of 68 stocks from the S&P 500 that have reduced their share counts every year for the past 10 years. The index's biggest sector is industrials, which make up about 28%, followed by financials at 24%, and consumer discretionary stocks at 17%.
Also worth noting: The index has just 13% of weightings in technology stocks, compared with 35% for the S&P 500. That could be a big plus, considering how many investors are worried about an AI bubble or having too much money tied up in Magnificent Seven tech stocks.
The top five constituents of the index are Qualcomm, Jabil, Comfort Systems USA, Masco Corp., and J.B. Hunt Transport Services. The S&P fact sheet doesn't list their specific weights, but since the index is designed to be equal-weighted, it is unlikely they greatly outweigh other constituents.
The returns of the buyback aristocrat strategy look solid -- although it's worth noting the index was launched in December 2025, so the returns are hypothetical and benefit from 20/20 hindsight. Over the past 10 years, the index boasts a hypothetical total return of 14.5% a year. That trails the S&P 500's 15.3%. But for investors worried about an overconcentration in tech stocks, that trade off might be well worth it.
The new fund's expense ratio is 0.39%, according to its prospectus.
The new fund is a sibling to ProShares S&P 500 Dividend Aristocrats ETF, which targets companies that have maintained and raised dividends for 25 straight years. That fund, which launched in 2013, has proved a hit with investors, garnering $11 billion in assets. But returns have been so-so. It's delivered a total return of 9.8% a year over the past decade.
ProShares isn't the first investment firm to argue investors should focus on buybacks. Goldman Sachs's recently retired chief equity strategist David J. Kostin tracked a basket of buyback aristocrats for the firm's research clients.
Cambria Funds co-founder Meb Faber has long been known for advocating "shareholder yield" -- a metric that combines dividends and buybacks into a single number that tracks overall cash returned to shareholders. The $935 million Cambria Shareholder Yield ETF has returned 13.2% a year on average over the past decade according to Morningstar.
Write to Ian Salisbury at ian.salisbury@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 07, 2026 03:30 ET (07:30 GMT)
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