REUTERS
- Companies that consistently buyback their shares outperform those that regularly pay dividends, according to Citi’s Tobias Levkovich.
- Buybacks have helped support stocks at times when mutual funds and other large investors backed off.
- Critics of buybacks say that they’re often done solely to meet Wall Street’s earnings-per-share estimates and help company executives earn bonuses tied to stock performance.
There are two primary ways public companies return capital to their shareholders: by paying out dividends or buying back shares.
When companies throw cash at their own stock, they reduce the number of shares outstanding and signal their stock is undervalued. This year, companies are set to spend up to $ 800 billion on buybacks thanks to the windfall from corporate-tax cuts, according to JPMorgan’s estimates. See the rest of the story at Business Insider
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