The S&P/ASX 200 Index (ASX: XJO) recorded a rather healthy gain during this Wednesday's trading session. The ASX 200 finished with a robust 0.5% gain at 7,377.9 points. But the Commonwealth Bank of Australia (ASX: CBA) share price fared even better.
CBA shares rose a pleasing 1.3% to finish the day at $107.45 each. As the ASX 200's second-largest share by market capitalisation, this would be helping push the ASX 200 higher as well.
Today's CBA share price move means that this ASX banking giant is now up 11.88% over the past month. It also means that CBA has closed on its highest share price we've seen in 2022 thus far.
Saying that, we did see CBA go higher last year. Back in November 2021, Commonwealth Bank shares hit an all-time high of $110.19. That's a level we haven't gotten close to since.
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CBA share price rises amid share buyback rumours
But let's talk about why CBA shares peaked at a 2022 closing high today. It might have something to do with rumours that the ASX 200 bank sector might be about to unleash some expanded share buybacks. According to reporting in the Australian Financial Review (AFR), broker Morgan Stanley has made a major ASX bank prediction. The broker has tipped that many of the ASX major banks, including CBA, might be poised to announce additional share buybacks. In CBA's case, Morgan Stanley is estimating that it could use the proceeds from the recent Bank of Hangzhou sale to add $2 billion to its buyback program.
Share buybacks are a way a company can boost returns to shareholders without paying a dividend. Not that CBA isn't still paying hefty dividends, mind you. It involves the company buying its own shares off of the market and effectively retiring them. This reduces the overall share count, which also means that the company's earnings per share (EPS) and dividends can get split fewer ways. It also usually results in long-term share price appreciation. That's because, under the laws of supply and demand, less supply equates to higher prices.
So it's perhaps no wonder that ASX investors are getting excited about CBA shares today.
At today's CBA share price, this ASX 200 banking share has a market capitalisation of $183 billion, with a dividend yield of 3.26%.
