The Dividend Imperative: How Dividends Can Narrow the Gap between Main Street and Wall Street

2Share Repurchases

Rather than manifest their company’s increasing profits by upping their dividends (and therefore allowing shareholders to benefit from a naturally increasing share price), large publicly traded U.S. corporations over the past 20 years have increasingly redirected their excess cash elsewhere, into share repurchase programs. Shifting from “stocks go up because dividends go up” in the first chapter to tackling the matter of share repurchases in this one is far from an abrupt change of topic, though it might seem so at first glance. Indeed, the same widespread culture of speculation that encourages investors to focus on near-term earnings also underpins the same inclination on the part of corporate management teams. Their speculation ...