Share Buybacks

What Are They?  

In a share buyback, a company repurchases its own shares from the stock market. Fewer shares left in circulation means each remaining share represents a bigger slice of the company.  

Unlike dividends, the buyback payout is indirect: investors benefit through higher earnings per share (EPS) and, potentially, a higher stock price, rather than a cash payment arriving in their account.

US tech giant Apple has been a record spender on buybacks, pouring more than $800 billion on them between 2013 and 2025.

Why Should I Care?  

Share buybacks have gradually increased in popularity among companies as a convenient way to create value for shareholders. Global buybacks hit a record of $1.5 trillion in 2025, exceeding dividends in value in some markets, such as the US. 

Firms like them because: 

• No commitment to regular cash payments 
• They can boost per‑share metrics like EPS without having to grow the business 
• In some countries, gains may be taxed later than dividends

What’s the Catch? 

Companies can overspend on buybacks, neglecting growth investments. And if they borrow to fund repurchases, it adds risk. A buyback can signal confidence, or it can signal a lack of better ideas. 

Whether you like them or not depends on your goals: 

• Income‑focused investors (often retirees) prefer dividends for predictable cash flow  
• Growth‑oriented investors favor buybacks for price gains and tax flexibility.