The PowerShares BuyBack Achievers Portfolio exchange-traded fund tracks companies that have bought back at least 5 percent of their shares over the past 12 months.
The ETF is down about 0.7 percent in 2016 and off 8.4 percent over the past year. The fund's biggest holdings include McDonald's, Boeing, Qualcomm, Lowes and Mondelez. A big name missing from the top holdings is Apple, which has buyback plans totaling $175 billion for a stock that is down 13.2 percent year to date and 27.5 percent over the past year.
Yet the buyback and dividend trend continues as companies remain reluctant to hire and invest in equipment and as the deal climate cools after a blistering 2015. Mergers and acquisitions activity plunged 25 percent in the first quarter, with much of the steam taken out by the collapse of multiple big-ticket deals, the most recent being the $6 billion Staples-Office Depot marriage.
"If we do get a synchronized bounce in growth, I think you'll start to see these buybacks reduced as companies start to see other uses for their cash," Paulsen said.
Indeed, the inability of stocks to break out has made buybacks a value play as much as anything else as companies find it hard to buy growth. Should the market jump higher, that could serve as an incentive to invest elsewhere.
"You've got to see a market that makes sense to expand operations in," Paulsen said. "If you think this is a pause [in the stock market] it's hard to beat that return. There is no capital investment that's going to give you that this year."