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Why buybacks are more profitable than dividends
Share buybacks are the most efficient way to return capital to shareholders in terms of tax optimization. Unlike dividends, a buyback does not create a taxable event for the investor.
When a company buys back its shares, the number of shares in circulation decreases. Your share in the business grows automatically, and the share price generally receives support.
“A buyback is an invisible dividend that compound interest accrues on your share of business ownership.”
In the long run, companies that practice regular buybacks often show higher returns than dividend lovers.
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