BBY Investments develops model portfolios centered on buyback yield — the overlooked component of equity income that traditional strategies leave on the table.
These SMA-ready strategies allow buybacks to be converted into distributable cash, generating buyback yield, while preserving your proportional ownership. This mirrors the rebalancing that naturally occurs in market-cap-weighted index funds following buybacks, but structured explicitly as income.
Identifies S&P 500 companies with the highest combined total shareholder yield (dividend yield plus buyback yield).
| JPMorgan | 8.4% |
| ExxonMobil | 5.9% |
| Home Depot | 4.8% |
| Johnson & Johnson | 4.4% |
| Bank of America | 4.2% |
| Chevron | 3.3% |
| Merck | 3.1% |
| Cisco | 2.9% |
| Wells Fargo | 2.9% |
| IBM | 2.5% |
| Strategy | S&P 500 | |
|---|---|---|
| 20-Year Ann. Return | 10.2% | 10.5% |
| 10-Year Ann. Return | 11.5% | 12.9% |
| 5-Year Ann. Return | 12.3% | 14.8% |
Targets S&P 500 companies with reliable, above-average total shareholder yield (dividend yield plus buyback yield).
| Apple | 10.0% |
| Alphabet | 7.4% |
| JPMorgan | 4.2% |
| ExxonMobil | 3.7% |
| Procter & Gamble | 2.8% |
| Johnson & Johnson | 2.5% |
| Home Depot | 2.5% |
| Bank of America | 2.2% |
| AbbVie | 2.2% |
| Chevron | 2.1% |
| Strategy | S&P 500 | |
|---|---|---|
| 20-Year Ann. Return | 10.4% | 10.5% |
| 10-Year Ann. Return | 11.4% | 12.9% |
| 5-Year Ann. Return | 12.2% | 14.8% |
Backtest results, March 2005 – December 2024. Not indicative of future performance. Actual yields vary year to year.
Share repurchases increase your proportional ownership in a company. If you participate pro rata, your ownership percentage remains unchanged, and you receive a cash payout. In practice, this works identically to a dividend distribution.
This process already takes place within market-cap-weighted index funds. When buybacks boost your position, future rebalances trim the excess and redistribute it across other holdings. Our strategies make this mechanism deliberate and transparent — turning it into a reliable income stream.
A company can return capital to shareholders in two ways.
You own 1,000 shares of 100,000 outstanding (1%)
Company pays a $5/share dividend (5%)
You receive $5,000 cash
You still own 1,000 of 100,000 shares (still 1%)
You own 1,000 shares of 100,000 outstanding (1%)
Company repurchases 5,000 shares (5%)
You receive $5,000 cash selling 50 shares
You now own 950 of 95,000 shares (still 1%)
Over the last twenty years, S&P 500 companies have dramatically shifted their capital return mix toward repurchases. Dividend payout ratios have steadily fallen while buyback spending has risen — yet the vast majority of equity income strategies continue to screen solely on dividend yield. The outcome is an ever-narrower, increasingly crowded universe of investable names. By incorporating buyback yield alongside dividends, our strategies reflect the complete reality of how companies distribute capital to shareholders today.
While the 4% withdrawal rule remains widely used in retirement planning, there is enduring wisdom in the principle of spending yield rather than liquidating principal. Selling shares to fund distributions means parting with ownership in an unpredictable market — and every share sold permanently exits your compounding base. A total yield framework lets you collect income from what companies are actively returning, rather than forcing share sales during downturns. When capital flows to you as yield — whether through dividends or buybacks — your principal stays intact and compounding continues uninterrupted.
Both strategies have produced S&P 500-comparable total returns across 20 years — with reduced volatility and shallower drawdowns. This is an income approach that doesn't require giving up capital appreciation.
| Total Yield Achievers | High Total Yield | S&P 500 | |
|---|---|---|---|
| Annualized Return (20yr) | 10.4% | 10.2% | 10.5% |
| 10-Year Avg Total Yield | 5.07% | 5.36% | 3.59% |
| Current Total Yield | 3.57% | 4.19% | 2.06% |
Backtest results, March 2005 – December 2024. Past performance does not guarantee future results.
We partner with RIAs on a model licensing basis. Reach out to explore our strategies and how they complement your current SMA offering.
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