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URL:  http://boards.fool.com/im-afraid-i-have-to-disagree-with-you-on-30547659.aspx

Subject:  Re: The Case for Dividends Date:  2/17/2013  8:30 PM
Author:  kelbon Number:  7842 of 8751

I'm afraid I have to disagree with you on companies buying back stock. There are a few good reasons to do it such as get stock to give to deserving employees and decreasing the amount of stock a large amount might enable an increase in the dividend. However, most buybacks are a waste of money. Yes, it is true that it improves the P/E, but it is PROFITS that count, not P/E.* Buybacks are a phony way of "giving" something back to the stock holders and are a waste of money. It means that the company can't think of a profitable way of investing that money to increase profits.

Well, you could say that a company paying a dividend can't think of a profitable way of investing that money to increase profits too. And, in a lot of cases you wouldn't be far off on either count.

Yes, for the company, it's profits that count, but not necessarily to the same extent for investors. For investors it's the size of the pie that's more important; the percentage of the company they own. If that percentage rises because of buy-backs and reinvested dividends then they are likely better off. Some buy-backs are a waste of money simply because a company pays too much per share to buy 'em back.

kelbon
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