Dividends and stock buybacks both distribute value to shareholders. Dividends distribute cash, and stock buybacks distribute value by increasing the price of sh

Dividends and stock buybacks both distribute value to shareholders. Dividends distribute cash, and stock buybacks distribute value by increasing the price of shares. In a rational market, distributing an $X dividend or buying back $X worth of shares will both have the same result for shareholder value. See the sibling comment for details. People who are investing with a long-term view in mind might prefer stock buybacks because it defers the taxable event until sale. I prefer stock buybacks when I'm planning to hold my shares. With a dividend, I have to pay taxes on the dividend before I can reinvest that cash by buying more shares; with stock buybacks, the share price just increases by that amount over time instead.