Key Takeaways
- European companies bought back EUR 182 billion of shares in 2025, more than double the amount 10 years ago, but growth in the last three years has been low.
- The buyback yield is a key metric for investors to assess how effective the repurchase of stock has been.
- Switzerland’s Novartis bought back the most shares in 2025.
While the US has historically been the home of the buyback, European companies increasingly embraced this method of rewarding shareholders this decade. Some 44% of listed European companies initiated share buybacks in 2025, the second-highest percentage in a decade after 2024.
The latest example is German software company SAP SAP, which in recent earnings announced a EUR 10 billion buyback program.
This continued a trend that accelerated after the pandemic, when cash-rich companies such as banks were allowed to redistribute money to shareholders via dividends or buybacks.
While buybacks remain controversial with investors who may instead favor dividends or higher capital spending, companies that buy back their shares have outperformed over the period.
While 2022 was the standout year in the last decade with EUR 219 billion in European buybacks, 2025 also saw EUR 182 billion in buybacks, according to Morningstar analysis.
However, in 2025, that amount has decreased compared to 2024. Part of the explanation lies in the rally of European stocks over the last three years, with the Morningstar Europe Index rising by 50% over this period.
European Stocks With High Buyback Yields
The average buyback yield, a metric that measures the amount of value a company returns to its shareholders through stock repurchases, has been 1.1% for European stocks paid in euros in 2025. Still, some of the largest buybacks have offered a yield above 5%.
Norway’s Equinor EQNR had the highest buyback yield in 2025, above 10%, while Switzerland’s Novartis NOVN bought back more than EUR 9.7 billion in shares.
The buyback yield is a financial metric that measures the amount of value a company returns to its shareholders through stock repurchases, expressed as a percentage of its market capitalization. It is calculated by dividing the market value of repurchased shares by the company’s market cap, and is used alongside dividend yield to assess total shareholder returns.
In Europe, the buyback yield has been declining in recent years, after peaking at 1.84% in 2022.
Companies Buying Back Shares Have Outperformed
European banks have been heavy users of share buybacks. Because these companies’ stock prices have risen, this explains the recent strong performance of indexes focused on companies that implement share buybacks. Since 2021, the MSCI Buyback Yield index has outperformed the Morningstar Europe Index.
Why Buybacks Dominate in the US
Share buybacks have historically been used more in the United States than in Europe. In the US, buybacks have a more favorable regulatory and tax framework and a corporate culture focused on per-share metrics, while in Europe the tradition of dividends predominates and there are more regulatory restrictions.
For example, in Europe a buyback program must be authorized by a general meeting, with certain limits. Buybacks are subject to the EU Market Abuse Regulation framework, which imposes volume limits—usually up to 10% of outstanding shares—price restrictions and strict transparency rules to prevent manipulation.
However, the number of buybacks skyrocketed in Europe in 2022. Many European companies accumulated large amounts of liquidity during the pandemic because operational restrictions limited investment spending. As economic activity normalized in 2022, that cash began to be used to return capital to shareholders, both in the form of dividends and buybacks. A large part of the increase in buybacks was also down to European banks being once more allowed to return capital, after years of regulatory restrictions.
Why Companies Repurchase Their Own Shares
Buybacks are a form of capital allocation: When a company has excess cash that it doesn’t need for reinvestment or acquisitions, it can either pay dividends or repurchase shares. Buybacks are an alternative to dividends and often more flexible because companies aren’t committed to make a recurring payment.
And by reducing the number of shares outstanding, earnings per share can mechanically increase, since the same net profit is now divided by fewer shares. This can make financial ratios look stronger and help support the stock price over time.
Buybacks can also signal confidence from management that the stock is undervalued. Repurchasing shares at what it considers a good price can be interpreted by markets as a positive signal of future prospects.
The repurchase of shares by companies is not without criticism. If executed when shares are overpriced, or at the expense of profitable reinvestment opportunities, buybacks may simply inflate per-share metrics without creating long-term operational value.
“In many companies a large part of executives’ compensation is in stocks, thus they may have a further incentive to favor boosting their near-term share price performance over longer term growth,” asset manager Amundi said in a June 2025 report on buybacks.
