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How is that better? With buybacks if I want to reinvest I don't have to pay taxes on them and if I want to realize the gains I can decide when to do that myself
by qwytw 3y ago
How is that better? With buybacks if I want to reinvest I don't have to pay taxes on them and if I want to realize the gains I can decide when to do that myself (of course seem more like an issue in Europe and with companies which only payout yearly).
- disgruntledphd2 3y agoBecause it encourages longer-term ownership, and gives shareholders a stake in the future cash flows of the business. Like I said, it's the tax treatment that basically stopped growth companies giving dividends. I think that we should change said tax treatment and also make buybacks illegal but that's a bit more controversial. In any case, for both G and FB, they'd need to do buybacks anyway because of their employee share programs.
- konschubert 3y agoBuybacks have the same effect of encouraging long-term ownership. Given a certain amount of money, spending it on stock buybacks vs spending it on dividends returns the same amount of money to each HOLDING shareholder. In one case, they receive a small sum. In the other case, the value of their stock goes up.