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How is that at all different from companies issuing dividends? Isn't returning value to the shareholders the entire point of selling stock to investors in the
by dmoy 7y ago
How is that at all different from companies issuing dividends?
Isn't returning value to the shareholders the entire point of selling stock to investors in the first place?
- ianai 7y agoEven dividends would be more thoughtful than stock buybacks. Such things are usually planned out for quarters at a time meaning they reflect some moderately deep portion of the business plan. Buybacks are just saying “we have this money in hand. We could use it for R&D to grow our business in some way (opening new branches, new plants, or just anything that could cost money up front for more money later), but instead we’re going to plaster this cash onto the facade of the business. We literally have no better use for it.”
- dmoy 7y agoI mean I'm asking, how are they actually different, besides one being worse for the shareholders w.r.t. taxes? They both involve transferring $X to shareholders. Dividends are also saying "we have this amount of money on hand or cash flow, and no better use for it, so here you go" I don't see the difference. Stock buyback looks to me like dividends without the tax - imagine a dividend reinvestment plan without the middle step and the tax bill.