Weighing the scale: dividends vs buybacks
Whether a company chooses to pay dividends or buy back its shares, what matters is its ability to generate free cash flow
WE ALL want to earn something from our investments. Isn’t that why we invest in the first place?
But how we actually reap our rewards can be an entirely different matter. There are several ways that we can be compensated when we invest in shares. One is through dividends. Another way is through share-price appreciation, which can be propelled through share buybacks.
But which is better – dividends or share buybacks?
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