Soleron on 29 January 2014
ListerOfSmeg said:
Buying the stocks back, which is them buying part of their own company back, is not immoral, unethical or any such nonsense and its not going to get people out buying stocks because stocks are not limitless. Yes it will increase the value of the company because every stock the buy back is a greater % of the company that they own themselves. It means they pay out less to shareholders, have less people to report to, etc. |
That's not correct. A company cannot own itself. A stock buyback is effectively increasing the % of the company owned by all other shareholders and hence their share's inherent value. It has nothing to do with more people wanting to buy the stock.
The total dividend bill will be unchanged.
