3 ms·

What if you were a long-term shareholder? The soon-extinct investor.

• toast0 5y ago
  Not sure what the term has to do with it. This is money the company doesn't know what to do with (otherwise they would have paid the tax consequences and used it as needed/desired), but now that there aren't tax consequences to repatriate it and return it to shareholders, they're returning it to shareholders. Maybe some would prefer a dividend rather than a buyback; but ignoring taxes, they're equivalent in terms of value, and I can't ignore taxes. A dividend is a taxable event and a buyback isn't. I'd rather defer the taxes as much as possible.
  • youeseh 5y ago
    It seems to me that buybacks reward those who've held the stock so far but want to exit their position, and managers who want a bigger bonus short-term. In contrast, dividends reward investors who want to remain invested, but I don't know what incentive management would have unless they too are shareholders.
    • toast0 5y ago
      If I receive a dividend and don't use it to buy more shares, now I'm less invested in that stock. And I've got to pay tax. If the company buys other people's shares, now I own (very marginally) more of the company. I agree with your management incentives, although RSUs and options contracts can adjust for dividends.