How are stock buybacks any worse than dividend payouts to investors?
I get how they are logistically different, but to me, whether you give the investors cash that they use to buy more stock, or you internally increase the value of a stock by buying it back with company funds, the result is the same – Investors get richer at the cost of investment.
Not saying buybacks aren’t bad, but I guess I just don’t understand the hate relative to dividend payments.
In: 98
People understand that bankers and executives like buybacks, and that bankers and executives make what look like excessive salaries on the backs of ordinary workers. So without thinking too hard, the buyback smells like another tool that the finance industry uses to extract money from ordinary workers for their own benefit.
You don’t have to dig into the mechanics of how a buyback works, that is not the level at which ordinary people think about finance. They just see finance bros making lots of money with obscure financial wizardry and assume it’s coming from them.
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