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Why would you ever pay a dividend when a stock buyback is more tax efficient for US investors?
by GlennS 6y ago
Why would you ever pay a dividend when a stock buyback is more tax efficient for US investors?
- ac29 6y agoQualified dividends are taxed at the same rate as capital gains in the US. There are benefits to the tax deferring nature of stock buyback induced capital gains, but there are also benefits to being taxed each year along the way via dividends (such as the risk that capital gains tax will go up in the future). Many companies both pay dividends and do stock buybacks, Intel among them.
- danielmarkbruce 6y agoAlso, think of pension funds, insurance companies and the like - they are huge investors, often pay no tax on dividends, and like the (usual) reliability of dividends so they can pay out cash as needed.