Are Dividends Really Better?
Do you want a stock dividend or buyback?
Despite there being a clear-cut answer there seems to be no consensus on the internet with regards to what is better?a share dividend or a stock buyback. Unfortunately, anecdotes are often trumping facts in which people regale us with boring details such as how GE threw so much money away via buybacks. Anecdotes do no matter. In this video, we compare buybacks vs. dividends pre-tax and then we explore the differences with taxes.
Obviously through a dividend, the cash is in your hand, and it is up to you where to put the money and the logic is, it is up to you to screw it up, but this logic is poor. With a sharebuyback, you chose to own a higher percentage of the company. You could also have sold some of your shares during a buyback and stayed at the same theoretical position.