Derek Saul is a New Jersey-based Senior Reporter on Forbes' news team. He graduated in 2021 from Duke University, where he majored in Economics and served as sports editor for The Chronicle, Duke's student newspaper, joining Forbes soon thereafter.
Elon Musk’s Artificial Intelligence Startup xAI Reportedly Nears $18 Billion Valuation With Fresh Funding As AI Race Heats UpStock buybacks, also known as share repurchases, are when public companies take profits and/or excess cash to acquire their own shares, often off of the open market, and then cancel the freshly purchased stock.
Companies execute the repurchases to theoretically increase the inherent value of outstanding shares and improve its performance per share metrics, and buybacks are one of the two most common ways for firms to reward shareholders for strong profits, the other being dividends, which are quarterly cash payments distributed on a per share basis.
Strong-performing companies typically favor either repurchases, which crucially pose a non-tax event for shareholders and provide a long-term boost to relative valuations, or dividends, which directly line investors’ pockets and are most commonly associated with utility stocks, whose stable demand consistently rewards investors with disbursals.
Though it’s not an either-or proposition to offer dividends or buybacks, the allure of dividends has waned as the volume of buybacks has skyrocketed: The S&P 500’s 1.4% average dividend yield, which compares annual dividend payments to companies’ share prices, isa whopping $925 billion worth of repurchases from S&P firms this year, which is 23% higher than 2019’s buybacks and more than 60% higher than 2014’s sum.
Apple’s $110 billion authorization, which could theoretically knock off about 4% of the $2.8 trillion iPhone maker’s outstanding shares, offered a glimmer of hope for capital-hungry investors, who also enjoyed magnificent seven members Meta and Alphabet’s first-ever quarterly dividend payments, announced during the first half of 2024.We’re launching text message alerts so you'll always know the biggest stories shaping the day’s headlines.
What Are Stock Buybacks Stock Buybacks Share Buybacks Dividends What Are Stock Buybacks? What Are Share Repurchases? Why Do Companies Buy Back Shares Apple Buyback How Do Stock Buybacks Work
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