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Another perspective: Share buyback moves the decision of paying taxes from the company to the investor (plus avoid double taxation). With dividends, the investo
by csomar 5y ago
Another perspective: Share buyback moves the decision of paying taxes from the company to the investor (plus avoid double taxation). With dividends, the investor will always get taxed. With share buyback, the investor can decide if he wants to keep his shares and not get taxed; or sell (with a profitable appreciation) and pay capital gain taxes.
- Glyptodon 5y agoWhile it's true that share buybacks are a nice way to return value to shareholders compared to dividends from a tax perspective they also have little to do with a business's growth or improvements in profitability. On some level I'm surprised bonuses are tied to share price and not market cap.
- throw0101a 5y ago> While it's true that share buybacks are a nice way to return value to shareholders compared to dividends from a tax perspective they also have little to do with a business's growth or improvements in profitability. Dividends also "also have little to do with a business's growth or improvements in profitability." At the end of the day, with either 'system', company management has decided that they cannot find internal uses for cash that give decent rates of return, and have decided to return the cash to shareholders. But it seems to me only one system is 'vilified'. There's a lot of magical thinking that goes on around dividends: * https://canadiancouchpotato.com/2011/01/18/debunking-dividend-myths-part-1/ https://canadiancouchpotato.com/2011/01/18/debunking-dividen...
- webinvest 5y agoThe purpose of public stock is pay out profit to shareholders. Buybacks are a method of achieving this. Infinite growth is a joke.