- Sainsbury is the latest FTSE 100 member to announce a share buyback for this year
- UK companies have announced £34.6 billion worth of share buybacks in 2026 to date, including £31.1 billion from FTSE 100 companies
- At the same stage in 2025 the running total was £34.8 billion (including £31.6 billion from the FTSE 100)
- Analysts believe dividend payments will grow in 2026 while takeover activity is running ahead of last year to reaffirm the UK’s status as a good source of yield and total cash returns
- Banks and oils need to shell out in the final eight months of the year if 2025’s buyback total is to be met
- Rising 10-year gilt yield could still lessen equities’ relative attraction
“Sainsbury’s announcement of a new £200 million buyback, on top of the £100 million already declared after the sale of its financial services operations, takes the total value of buyback programmes to £31.1 billion from members of the FTSE 100 index, and £34.6 billion across the whole UK market,” says AJ Bell investment director Russ Mould.
“This is almost bang in line with last year’s totals at the same stage of £31.6 billion from the FTSE 100 and £34.8 billion overall, to remind shareholders of the UK’s appeal as a source of cash returns.
Source: Company accounts. *As of 23 April, in each year.
“This leaves the UK equity market in with a good chance of matching 2025’s buybacks tally of £58.6 billion from the FTSE 100 and £7.9 billion from the rest of the UK market. That sum from the FTSE 100 just exceeded the prior all-time high of £58.2 billion that was returned to shareholders via share buybacks in 2022.
“Those cash returns supplement the income received by shareholders in the form of dividends and special dividends, where analysts believe 2026’s total payout from the FTSE 100, and the UK equity market as a whole, will exceed the record high set in 2018.
“Analysts’ consensus forecasts suggest that the FTSE 100’s members are primed to pay out £88 billion in ordinary and special dividends this year, and the FTSE All-Share some £98 billion in total.
“Between them, those totals equate to 3.5% of the FTSE All Share index’s £2.8 trillion stock market capitalisation.
“The current sum of all the buyback announcements is the equivalent of a further 1.2%.
Source: Company accounts, Marketscreener, analysts’ consensus forecasts
“As if that were not enough, the UK market is still drawing predators, as can be seen from a busy slate of live takeover deals.
“The returns banked from deals can be a helpful supplement all the same. The £29.7 billion in cash, or cash-and-stock, bids that is already on the table this year equates to a further 1% of the FTSE All-Share’s stock market capitalisation.
“At the moment, then, the total potential cash return from the UK equity market, assuming all of the deals go through, and there are no more; analysts’ dividend forecasts are correct; and there are no further buyback announcements is £163 billion, equivalent to a 5.7% ‘cash yield’ on the FTSE All-Share.
“That handily outpaces the 3.5% Bank of England base rate, the prevailing 3.3% annual rate of inflation, as measured by the consumer price index, and the UK 10-year gilt yield, which is hovering near 5.0%.
“There is scope for further buybacks, from the banks and oils in particular. Shell ran four, quarterly programmes worth £10.5 billion last year and has thus far announced only a scheme for the first quarter, worth £2.6 billion. Some may be tempted to argue that buying back stock at a time of war in the Middle East and cost-of-living concerns at home, thanks to rising oil prices, is a bad look, but such issues did not prevent the oil and gas major from running buybacks worth £13.8 billion in 2022, when Russia’s attack on Ukraine prompted a big spike in hydrocarbon prices.
“The banks could run further programmes, too, especially as HSBC may recommence buybacks in the second half.
“In this respect there is scope for further upside in UK equity market cash returns and 2024’s record aggregate return from dividends, buybacks, and takeovers of £207 billion could be within reach, especially if there are further takeover approaches.
Source: Company accounts, Marketscreener, analysts’ consensus forecasts
“Equally, dangers do lie in wait.
“First, any escalation of the conflict in the Middle East could drive oil and gas prices higher still, hit trade flows, burden companies and consumers with extra costs and ultimately crimp global growth. A slowdown or recession could persuade companies to conserve rather than distribute cash.
“Second, BP, Centrica and Intertek have all halted their buyback programmes, as has HSBC as it digests last year’s $13.6 billion purchase of the 37% stake in Hang Seng Bank that it did not already own. NatWest has said it will pause its buybacks once the current one is finished, thanks to the £2.7 billion deal for wealth manager Evelyn Partners. Animal spirits in British boardrooms could mean acquisitions take precedence over cash returns.
“Finally, investors will have to keep an eye on inflation and the 10-year gilt yield. A sustained period of strength in oil and gas, or disrupted global supply chains, could stoke inflation and the higher inflation goes the greater the challenge to corporate profits and also the benchmark it provides relative to the total UK cash yield. Higher inflation could also push up the 10-year gilt yield, the proxy for the so-called risk free rate, and the closer that gilt yield gets to the equity cash yield, the more attractive gilts may start to look to investors, especially if a difficult global macro backdrop prompts any bouts of risk aversion.”
Source: LSEG Refinitiv data
