Comments on: Share Buyback or Increase Dividends? http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/ Everything to do with thickening your wallet by entrepreneur turned President of an Investment Company Wed, 10 Mar 2010 15:31:00 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Dividend Growth Investor http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/comment-page-1/#comment-9681 Dividend Growth Investor Tue, 29 Apr 2008 02:07:52 +0000 http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/#comment-9681 The problem with stock buybacks is that the company could vary the amount of stock or amount of money it would use each year to buy back stock. With dividends on the other hand, the company knows exactly what it has to pay each year. If it pays less than anticipated, many shareholders would be unhappy and sell.. I personally enjoy getting dividends, because I am the one who makes the decision how to spend it. If a company buys back stock, that does increase EPS, but then I have to sell stock in order to eat, thus increasing my trading costs.. The problem with stock buybacks is that the company could vary the amount of stock or amount of money it would use each year to buy back stock. With dividends on the other hand, the company knows exactly what it has to pay each year. If it pays less than anticipated, many shareholders would be unhappy and sell..
I personally enjoy getting dividends, because I am the one who makes the decision how to spend it. If a company buys back stock, that does increase EPS, but then I have to sell stock in order to eat, thus increasing my trading costs..

]]> By: 149th Carnival of Personal Finance - Chasing Dreams Edition | The Happy Rock http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/comment-page-1/#comment-9292 149th Carnival of Personal Finance - Chasing Dreams Edition | The Happy Rock Mon, 21 Apr 2008 12:49:33 +0000 http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/#comment-9292 [...] My Wallet presents Share Buyback or Dividend Increase - Thicken My Wallet shares a look into whether a share buyback is all that it is cracked up to [...] [...] My Wallet presents Share Buyback or Dividend Increase – Thicken My Wallet shares a look into whether a share buyback is all that it is cracked up to [...]

]]> By: Weekly Dividend Investing Roundup - April 18, 2008 » The Dividend Guy Blog http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/comment-page-1/#comment-9165 Weekly Dividend Investing Roundup - April 18, 2008 » The Dividend Guy Blog Fri, 18 Apr 2008 12:45:02 +0000 http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/#comment-9165 [...] dividend investors ask is is it better for a company to do a share buyback or raise dividends. Thicken My Wallet had a look at that [...] [...] dividend investors ask is is it better for a company to do a share buyback or raise dividends. Thicken My Wallet had a look at that [...]

]]> By: Dividends4Life http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/comment-page-1/#comment-9089 Dividends4Life Wed, 16 Apr 2008 17:38:33 +0000 http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/#comment-9089 Great read! There is room for both and a proper time for each. As FJ points out, when a stock is depressed the best use of the capital is to buy back shares. Best Wishes, D4L Great read! There is room for both and a proper time for each. As FJ points out, when a stock is depressed the best use of the capital is to buy back shares.

Best Wishes,
D4L

]]> By: MillionDollarJourney http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/comment-page-1/#comment-9013 MillionDollarJourney Tue, 15 Apr 2008 02:13:07 +0000 http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/#comment-9013 What I like about the share buyback is that it's tax free earnings growth for the investor which hopefully results in higher stock prices. Personally though, I would prefer a dividend any day. Nothing beats cash in your own pocket. What I like about the share buyback is that it’s tax free earnings growth for the investor which hopefully results in higher stock prices. Personally though, I would prefer a dividend any day. Nothing beats cash in your own pocket.

]]> By: FinancialJungle http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/comment-page-1/#comment-9000 FinancialJungle Mon, 14 Apr 2008 18:26:09 +0000 http://www.thickenmywallet.com/blog/wp/2008/04/14/share-buyback-or-increase-dividends/#comment-9000 Well, sometimes it's good and sometimes it's bad. I like using a toll bridge as an example of a cash cow business with little room for safe or creative growth. Return of invested capital may be stellar at 10%. But, if the stock is depressed to a point of yielding 15%, management's best move is to buy back shares instead of raising dividends. You got me thinking about this though; a share buyback can be a bad sign if all other players in the same industry are wildly successfully at growing their business. Well, sometimes it’s good and sometimes it’s bad.

I like using a toll bridge as an example of a cash cow business with little room for safe or creative growth. Return of invested capital may be stellar at 10%. But, if the stock is depressed to a point of yielding 15%, management’s best move is to buy back shares instead of raising dividends.

You got me thinking about this though; a share buyback can be a bad sign if all other players in the same industry are wildly successfully at growing their business.

]]>