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If a company has 100 shares on issue how is paying you $0.10 per share in dividends different from a buy back of 10 shares at $1 each. Either puts $10 dollars
by artsrc 15y ago
If a company has 100 shares on issue how is paying you $0.10 per share in dividends different from a buy back of 10 shares at $1 each.
Either puts $10 dollars into the pockets of shareholders and out of the hands of the company.
Dividends versus a buyback are the same thing except from a tax point of view.
If you choose not to sell that is like an automatic dividend re-investment plan.
- philwelch 15y agoBuybacks are fine too, but a lot of companies don't do either.
- kevin_morrill 15y agoNot true. Marc Cuban has written an excellent blog post on this: http://blogmaverick.com/2004/07/20/microsoft-dividends-and-stock-buybacks/ http://blogmaverick.com/2004/07/20/microsoft-dividends-and-s... Dividends reward you for holding a stock. Buybacks you when you sell the stock. I'd much prefer dividends, and if we had a better tax policy on them, I think you'd see companies do a lot less crazy #&*$ to expand into markets that they have no business in.