Stock Repurchase An Alternative To Cash Dividends

When a firm wants to pay cash to its shareholders, it normally pays a cash dividend. Another way is to repurchase its own stock. In 2000, for example, 2,072 firms announced buyback programs totaling almost $300 billion.

In fact, net equity sales in the United States have actually been negative in some recent years. This has occurred because corporations have actually repurchased more stock than they have sold. Stock repurchasing has thus been a major financial activity, and it appears that it will continue to be one.

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