{"id":1738,"date":"2019-06-14T14:31:25","date_gmt":"2019-06-14T14:31:25","guid":{"rendered":"http:\/\/wdsinvest.com\/?p=1738"},"modified":"2026-02-17T21:49:38","modified_gmt":"2026-02-17T21:49:38","slug":"the-buyback-why-you-shouldnt-shut-down-non-dividend-stocks","status":"publish","type":"post","link":"https:\/\/wdsinvest.com\/fr\/the-buyback-why-you-shouldnt-shut-down-non-dividend-stocks\/","title":{"rendered":"The Buyback \u2013 Why You Shouldn\u2019t Shut Down Non-Dividend Stocks"},"content":{"rendered":"

\u201cDo you know the only thing that gives me pleasure? It’s to\nsee my dividends coming in.\u201d
\n
\nThat\u2019s a quote from John D. Rockefeller, the first U.S. billionaire in history,\nand while investors today (hopefully) have other joys in life, many within the\nvalue investment community share Rockefeller\u2019s love for dividends. <\/p>\n\n\n\n

While dividends theoretically<\/em> offer no benefit to\ninvestors (a stock\u2019s price will decrease by the amount of the dividend), many\ninvestors believe they demonstrate disciplined capital allocation; a management team that\ncommits to a dividend is less likely to pursue risky empire-building\nacquisitions. Dividends also provide investors with a tangible reassurance that\na company\u2019s earnings are real, that the business is actually making money and\nnot relying on non-cash gains to boost profit numbers. But while dividends have\naccrued quite the cult following, there is an alternative to the dividend that\ngets a lot less love from the investment community, and that is the share\nbuyback. <\/p>\n\n\n\n

A share buyback is exactly what it sounds like; it\u2019s when a\ncompany uses some of its own money to buyback shares from the market. These\nshares are effectively cancelled by the corporation, reducing the total number\nof shares outstanding. This increases each individual share\u2019s claim to a\ncompany\u2019s earnings since you are splitting the profits among fewer investors.\nShare buybacks don\u2019t get nearly the same level of attention as dividends, but\nfrom a financial perspective, they actually provide a similar benefit to\ninvestors with an added tax advantage. <\/p>\n\n\n\n

When a company buys back its shares, we tend to see the stock\nprice increase as the buyback boosts earnings per share. Ignoring taxes, this\nincrease in price should be equivalent to any benefit the investor would have\nreceived from a dividend; whether the company commits $1B to a dividend or a\nshare buyback, they are returning the same amount of money to investors. But\nwhile investors must pay taxes on dividends as they\u2019re received, buybacks don\u2019t\naccrue any liability for the investor. In this way, they provide a deferred tax\nbenefit; you will only pay taxes when you sell the position. <\/p>\n\n\n\n

Now much like dividends, not all buybacks are created equal.\nA company will ideally only buyback its shares when the stock is undervalued;\nin the same way we strive to buy low and sell high, we want the companies we\nown to buy their own shares back at a low price. Many companies, however, try\nto consistently buyback their shares and actually pullback on their programs\nwhen valuations are down, when the program would have the largest impact on\ninvestors. So the timing of a buyback is important, while its less of a factor\nfor dividends. Dividends are also favourable for income investors who intend to\nwithdraw the cash from their accounts on a regular basis, as it saves them the\ntransaction fee associated with selling a position. <\/p>\n\n\n\n

But, for investors looking to reinvest their dividends as\nthey come in, a buyback has its advantages, providing the same effect while avoiding\ntransaction fees and taxes. For this reason, we aren\u2019t so quick to limit our\nstock universe to companies that don\u2019t pay a dividend.<\/p>\n\n\n\n

It\u2019s great to see the dividends of your stocks come in, but for\nthe right price, I\u2019m just as happy seeing fewer investors trying to take a\npiece of my profit pie.<\/p>","protected":false},"excerpt":{"rendered":"

\u201cDo you know the only thing that gives me pleasure? It’s to see my dividends coming in.\u201d That\u2019s a quote from John D. Rockefeller, the first U.S. billionaire in history, and while investors today (hopefully) have other joys in life, many within the value investment community share Rockefeller\u2019s love for [\u2026]<\/span><\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1738","post","type-post","status-publish","format-standard","hentry","category-miscellaneous"],"yoast_head":"\nThe Buyback \u2013 Why You Shouldn\u2019t Shut Down Non-Dividend Stocks - Watson Di Primio Steel (WDS)<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/wdsinvest.com\/fr\/the-buyback-why-you-shouldnt-shut-down-non-dividend-stocks\/\" \/>\n<meta property=\"og:locale\" content=\"fr_FR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Buyback \u2013 Why You Shouldn\u2019t Shut Down Non-Dividend Stocks - Watson Di Primio Steel (WDS)\" \/>\n<meta property=\"og:description\" content=\"\u201cDo you know the only thing that gives me pleasure? It’s to see my dividends coming in.\u201d That\u2019s a quote from John D. 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