Data Update 7 for 2023: Dividends, Buybacks and Cashflows

[@herokorai8346]

This should be presented to the "economic illiterates" and "silver-tongued demagogues" :) Its a balanced presentation grounded on reality. Great work as always professor!

[@korentanach6516]

Like always. Simple, informative, and to the point. Thank you professor.

[@mateogjinali764]

Professor, I was wondering about buybacks versus dividends and considering the reality that many companies' business models cannot and will not last forever (despite our way of valuing them as such), as well as the fact that most companies buy back stock even when the stock is overvalued (or very stretched inputs are needed to justify that value). Bed Bath & Beyond has spent over 10B dollars on buybacks but is now in the process of bankruptcy and so I was wondering if dividends (especially since taxes have converged) would make more sense given those risks... I also wanted to say thanks from the bottom of my heart! Your videos have been unbelievably valuable for students like me who want to learn more about Finance and Valuation, and I just wanted to say thanks.

[@andresrubio2292]

Thanks dear Aswath. As always, very clear and practical!!!

[@probalghosh8448]

as usual brilliant analysis

[@redcae1911]

Hello I believe that the tax on buybacks is 1% and not 2% as said in the video Excellent points on your video thank you for educating us

[@greenspot1123]

Sir, i wish you would study Indian stock markets too.

[@Tential1]

Buybacks are OUR CHOICE as business owners. What we choose to do with our money is none of the Public's concern because they were not invested and my biggest problem is people who don't own the stock crying about what the company chose to do. If we choose to burn our own money that's our choice as shareholders but the fact that they want to cry about whether we chose dividends BuyBacks or just reinvesting the money into other businesses is beyond me because you weren't invested. If you are invested in a company then you can complain but as far as I'm concerned if you aren't invested in a company and they aren't affecting you go away. If a company screws up fine them but don't cry about what we chose to do in the decisions we chose those are our decisions not yours.

[@jayliu645]

Some buybacks are just offset the stock based compensation, any views on that?

[@FireEverLiving]

That practice strikes me as good. Stock-based compensation is often good because it aligns incentives, and avoiding dilution is nice if possible. The 1% buyback tax is on *net* buybacks, so these buybacks aren't taxed.

[@RohitXSarma]

Slide 18: Is it possible that those who don’t buyback 28:47 are indeed young firms that are more indebted? Does controlling for age result in similar conclusion?

[@xfer07]

Was there over valuation problem in SVB prior to collapse?

[@Tential1]

A lot of companies have tiny token dividends too.

[@Tential1]

On part 2, I want some of my companies to lever up and buy back stock. When cash was cheap I think a lot of companies could have bought back their stock with leverage and been fine. I still think that this ability to buy back stock has not been fully utilized

[@rubiks5659]

A question for you: what real value is created materially when a company borrows money to buy back stock? In my view, it's an accounting trick where the only beneficiaries are the bank that wrote the loan and the companies "number go up". Thoughts on this?

[@Tential1]

The way companies treat dividends drives me insane and that is why I prefer companies to do BuyBacks because at least that can be done at will whereas dividends the people who buy dividend stocks prioritize their dividend in those shareholders are terrible people I don't want to be associated with them. Take a company like Intel, Intel needed to reinvest and instead we were stuck paying dividends. The few companies that are willing to change their dividend based on cash flows are companies I'm okay with but companies that don't, and aren't brain dead companies that require zero innovation/capex, scare me.

[@FireEverLiving]

Now that there's a tax, companies should just do more special one-time dividends.

[@bubblydeveloper6180]

These buybacks causing these flows in the market 🤡

[@Tential1]

On part 4,if employees and customers want a say, buy the stock, or gtfo.

[@desomusicnft9178]

It's gold

[@Tential1]

Special special dividends... 😂🤣😭😂😘

[@salmanworks]

No more updated for 9 months? 🥲

[@rickeisha2009]

Financial year ends on 31st March