Head of North American Investment Strategy & Research
Insight of the Week
Frequently, companies use excess cash on their balance sheet to return wealth to shareholders, either through dividends or stock buybacks.
In the past, dividends were the preferred, however in recent years US firms find share buybacks to be more flexible and efficient.
Apart from improving shareholders value, share repurchases can also help firms better manage their capital structure, boost earnings per share, and sends a signal of financial strength to attract more investors.