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Buybacks are increasingly viewed as a better way to return money to shareholders, for companies, not individual shareholders. They prop up the stock obviously,
by saovq 3y ago
Buybacks are increasingly viewed as a better way to return money to shareholders, for companies, not individual shareholders. They prop up the stock obviously, but also allow greater flexibility for the company in removing what becomes an expected obligation (dividend payment). In exchange, you can have a discretionary buyback program that can fluctuate in amount over time, and is viewed as less of a bell weather for the company's health.
What is good about buybacks for investors is that you can choose how to time your sales, which can result in tax benefits. Dividends you pay tax on a schedule that might be less suitable to whatever financial massaging investors might want to engage in.
- peteradio 3y agoCan you do buybacks forever or just a few decades or so?
- votepaunchy 3y agoYou can always split the stock if employee and executive options are not creating sufficient shares.
- morepork 3y agoOn top of this, execs typically have a lot of stock based compensation. So buybacks are way better than dividends for them
- roncesvalles 3y agoDividends, in addition to creating an expectation, are also a ratchet because an ever-increasing streak of dividends is tracked as a metric to gauge the health of a company.[1] If a company wants to return one-time excess money to investors, buybacks are the only way. [1] https://en.wikipedia.org/wiki/S%26P_500_Dividend_Aristocrats https://en.wikipedia.org/wiki/S%26P_500_Dividend_Aristocrats