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Dividends & corporate actions

Share Buyback

A company repurchasing its own shares from the market, which reduces shares outstanding and returns cash to shareholders.

Part of the Growth & Capital Returns course · Lesson 21 of 26
Formula
Buyback Yield = Net Share Repurchases / Market Capitalization

What it is

A share buyback (or repurchase) is when a company uses its cash to buy back its own stock, either on the open market or through a tender offer. The repurchased shares are retired or held as treasury stock, lowering the share count. It is an alternative to dividends for returning capital to shareholders.

Why it matters

By shrinking the share count, a buyback can raise earnings per share and each remaining holder's ownership stake. The pitfall is that buybacks add value only when shares are repurchased below intrinsic value; companies that buy back high-priced stock, or fund it with debt, can destroy value rather than create it.

How it's calculated

There is no single formula; the effect is measured by the drop in shares outstanding and the cash spent. Buyback yield expresses the value of net repurchases as a percentage of market capitalization.

How Quintarthai uses it

Share counts and capital-return trends are visible in the Financials and per-share Ratios tabs on each company's deep-analysis page in the app.

Cross-border note. Canada applies a 2% tax on net equity buybacks by public companies (effective 2024), and the US applies a 1% excise tax, so the after-tax cost of a repurchase differs by listing jurisdiction.

FAQ

Is a buyback better than a dividend?
Neither is inherently better; buybacks are more flexible and can be tax-efficient, while dividends give predictable cash, and the value of a buyback depends on the price paid.
Does a buyback always raise the share price?
No. It can support the price by reducing supply and lifting per-share figures, but a buyback at an overvalued price can still leave shareholders worse off.
Related terms
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