RE:RE:RE:RE:RE:RE:RE:Share buy backsMadeInHeaven wrote: You all miss the point. If company buyback 10% in ideal scenario based on the same market cap price should go up 11.1% if 20% price up 25% if 30% buyback price should go up by 43% etc this is advantage over dividend that share price increase goes parabolic if company buys back 90 % of the shares price should be up 900%.
I didn't miss that point at all. If you have a market cap 1b company with a 100m float, each share is 10 bucks. If they buy back 20m shares, and nothing has occurred at the macro level to alter the market cap, then each of the remaining shares is worth 12.50. However, if the same company was paying out 100m in dividends, a buck a share, it only costs 80m to pay out the buck a share. That makes the dividend more sustainable. If they raise the dividend back up to an annual payout of 100m, your dividend goes to 1.25 the market should bid up the price of the share based on the dividend yield. That's all theory, how markets react is different. You don't know what the market will do. I'm good with a balanced approach between debt, dividends and buy backs. I actually don't want to see the dividend raised beyond the 5 cents. I'd rather see it paid in a special dividend beyond 5 cents. That way the money is there if an opportunistic situation arises and secondly it's less likely to get cut. The price at which the divvy is sustainable is my most important watch item. Right now for Cj, that price is 55 wti