Buybacks & Capital Returns

Dividends, buybacks and what they say about management.

1. How Buybacks Work — A buyback is when a company uses its cash to purchase its own shares. Fewer shares remain, so each one owns a bigger slice of the business. Here is how buybacks are carried out, the rules around them and what happens to the shares.
2. Dividends vs. Buybacks — Companies return cash to shareholders in two main ways: dividends and buybacks. Each has different effects on taxes, flexibility and what it signals. Here is how they compare and how real companies mix the two.
3. Buybacks and Earnings Per Share — Buybacks lift earnings per share even when total profit does not change. That can make growth look better than it is. Here is the math, the effect of stock-based pay and how to see through it.
4. When Buybacks Create Value — A buyback is an investment decision: the company is buying its own stock. Like any investment, it pays off when the price is right. Here are the conditions that make buybacks good for long-term owners.
5. When Buybacks Destroy Value — Buybacks are not always good news. Companies often buy the most stock near market peaks and the least near bottoms, the exact opposite of good investing. Here are the ways buybacks can hurt shareholders.
6. Reading a Buyback Announcement — Headlines often trumpet a “$50 billion buyback,” but the number alone says little. Here is how to size an announcement, check whether the company follows through and find the real figures in its filings.