Fri, December 20, 2024
Thu, December 19, 2024
[ Thu, Dec 19th 2024 ]: Forbes
13 Must-Read Investing Books
Wed, December 18, 2024

Stock Buybacks Outperform Dividends: Here's the Key Advantage

  Copy link into your clipboard //stocks-investing.news-articles.net/content/202 .. tperform-dividends-here-s-the-key-advantage.html
  Print publication without navigation Published in Stocks and Investing on by MSN
          🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source
When investors consider the benefits of investing in a stock, they usually only consider the basic level of capital appreciation and dividend payouts. After all, this is what is largely covered in the mainstream financial media and what is talked about at the proverbial cocktail parties,
The article from MSN Money discusses the advantages of stock buybacks over dividends, highlighting a key benefit for investors. Stock buybacks, or share repurchases, occur when a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This action can increase earnings per share (EPS) because the same amount of earnings is spread over fewer shares. The primary advantage mentioned is tax efficiency: when a company repurchases its stock, shareholders do not have to pay taxes on the transaction until they sell their shares, potentially at a lower capital gains tax rate compared to the immediate taxation of dividend income. Additionally, buybacks provide companies with flexibility in returning capital to shareholders, as they can choose when to buy back shares based on market conditions and their financial health, unlike dividends which once started, are expected to continue. The article also notes that while buybacks can signal that a company's management believes its stock is undervalued, they can also be criticized if used to artificially inflate stock prices or if they occur when the stock is overvalued.

Read the Full MSN Article at:
[ https://www.msn.com/en-us/money/top-stocks/stock-buybacks-outperform-dividends-here-s-the-key-advantage/ar-AA1w9F4K ]