Remember: share buybacks are just a way to pay out share dividends, but avoid taxes while you're doing it. (Because it raises the price of the remaining shares, that's capital gains, taxed at 15% rather than the ~35% of the top income bracket.)
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Qualified dividends (which these would be) are taxed the same as capital gains.
The real dodge is that with buybacks is that owners can choose not to defer the taxes by not selling, while with dividends everybody has to pay now.
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Can also look at buybacks or dividends as the opposite of a public offering of new stock (e.g., an IPO).
A buyback says that the company has more cash on hand than it has better-than-market-return uses for.
A stock offering is saying that a company has good uses for new cash.
Mar 18, 2020 · 11:39 PM UTC
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