Year-to-date, companies have issued $873.1 billion in debt, up from last year's $813.5 billion, according to Informa Global Markets. "The ability to use the cash on your balance sheet, if you can borrow at very cheap rates to invest in your company is compelling," said Bob Doll, chief U.S. equity strategist at Nuveen Asset Management. "I'm surprised there hasn't been more of it."
Doll said the contribution to earnings amounts to roughly 2 percent of the EPS gains in the S&P over a 12 month period. "It's a big contributor. Companies are being smart. Balance sheets are underleveraged," he said.
Apple is funding its $50 billion buyback program with debt, and there are many others, including Merck, which announced a $15 billion buyback this year, according to Birinyi Associates.
(Read more: Morgan Stanley to seek share buyback OK: Report)
Andrew Wilkinson, chief economic strategist at Miller Tabak, said the performance of companies that buy back shares has outpaced the indices also when looking longer term. He said since the start of 2000, the S&P buyback index is 20 percent higher than the S&P 500. It measures the performance of 100 companies with the highest buyback ratio for four consecutive preceding quarters. The Nasdaq has underperformed Nasdaq Composite buyback stocks even more. The basket has quadrupled, he said, while the Nasdaq is still below the value it was at the end of 1999.
Willkinson reviewed the performances of several companies that have large buyback programs. "I ran a really quick 'what-if' to show what impact it would have on EPS assuming [the number] of shares was kept constant from either [2008 or 2009] levels," he wrote in an email.
"Oracle would have lower EPS by 8.9 percent today while Direct TV would be 46.9 percent lower," had it not bought back its stock. Wynn's $3.14 per share earnings would 23 percent lower, and Motorola would be 17 percent lower, if it had not reduced shares outstanding from 323.6 million to 265.3 million.
"You'd like to see EPS grow indefinitely at 8 to 10 percent, but that's not the case," said Greenhaus. "What gets overlooked… in this is what's supposed to happen. Everyone is lamenting the rate of buybacks. What happens in numerous cycles is earnings growth slows down. It's a baton toss, you hand the baton off from an earnings driven rally to a multiple driven rally."
(Read more: Apple now hoards 10% of US corporate cash)
Greenhaus said the fact that the market's PE in now above the historical average, is not an issue itself since it is an average; however it is getting more fully valued. "The market is no longer a buy as it has been for some time. Now you are relatively speaking much more in line with historical norms," he said.