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
Well, for one, if the company buys back it’s stock, whoever formerly owned those shares is no longer receiving dividends in connection with holding those shares. Any increase in share value resulting from a buyback by definition wouldn’t result in a benefit to whoever formerly held those shares, because they don’t hold them anymore.
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