AstraZeneca Suspends Share Buybacks
Pascal Soriot, chief executive of the FTSE 100 firm, said:
As I assume my new responsibilities at AstraZeneca, I believe this is a prudent step that maintains flexibility while the Board and I complete the company's ongoing annual strategy update.
Mr. Soriot wasted no time making the decision. The announcement was made at 2 p.m. on his first day as group boss.
Mr. Soriot also confirmed that AstraZeneca had completed net share repurchases of $2.3 billion during 2012. The company's target for the year had been $4.5 billion.
The decision to suspend the buybacks follows substantial expenditure and inconclusive benefits to shareholders.
Indeed, the pharma group spent $6 billion on share buybacks last year to increase the expenditure seen since 2000 to almost $27 billion.
However, the firm's 2011 annual report indicates the average price per share paid since 2000 has been about 30 pounds, while figures from Bloomberg indicate the average market price throughout the same time was less than 28 pounds.
Indeed, the only year AstraZeneca did not make any share repurchases since 2000 was 2008, when the banking crash sent the price plunging to a bargain 17 pounds.
Still, Mr. Soriot did say this week that AstraZeneca's core earnings target range for 2012 would be maintained at $6.00 to $6.30 per share. That range puts the shares on a near-term P/E of 8.
And assuming the expenditure saved on buybacks can help sustain the dividend at $2.80 per share, AstraZeneca's stock currently yields 6%.
Right now, AstraZeneca is just one of a number of FTSE large caps that offers a dividend income well ahead of what you can expect to receive from a standard savings account.
If you are seeking other high-dividend possibilities, The Motley Fool has produced an exclusive free report that could assist your investment decisions.
"8 Large-Cap Yield Shares Held By Britain's Super Investor" reveals the favorite income stocks held by Neil Woodford -- the City fund manager who has thrashed the FTSE 100 by favoring dividend-paying blue chips.
Just click to download the special Neil Woodford report today. But hurry, as this report will remain free for a limited time only.
Investing is by no means easy in today's uncertain economy. That's why we've published "Three Top Sectors" -- our guide to three favorable industries for long-haul investors. This free report will be dispatched immediately to your inbox.
Further Motley Fool investment opportunities:
The article AstraZeneca Suspends Share Buybacks originally appeared on Fool.com.Maynard Paton does not own shares in any of the above companies. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.