And how are dividends really tied to the fundamentals of business performance? Sure, if you can’t pay the dividend it means you don’t have the cash to do so, and a rising dividend means you have more profit to pay out. But the same thing goes for buybacks. And buybacks arguably do more for the business in the long run. The money paid for a dividend goes out the door, with nothing gained for the company. A buyback is a better investment for the company, while a dividend is a more reliable gain for the shareholder.
This is all just re-arranging financial deck chairs so that executives and major shareholders get into the life boats first.
Everyone benefits the same from a buyback, per share owned. Of course major shareholders have more to gain – they have a lot more to gain from a dividend payment too, since it’s done on a per-share basis.
