Dividends vs Buyback Accounting, Finance, SPSS Coursework (Coursework Sample)

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Dividends Vs. Buyback Profits
Dividends refer to the shareholders' payout after the company makes sales profits also from retained earnings of the shareholders. The yield is obtained by dividing the annual dividend per share by the price of the stock. These dividends are paid out equally to all shareholders after the agreement among the board of directors of the company.
Additionally, these payouts are always distributed at specific dates in every financial year of the firm. The shareholders can receive dividends as direct cash payments, as new stock issued by the company, as assets (physical/ investment securities), or in the form of special dividends payout quarterly instead of annually. Payout dividends do not affect the value of the company but instead lowers its total value of equity CITATION Fin19 \l 2057 (Finance, 2019). Shareholders prefer dividends as they are treated as tax-free income by the government. Paying dividends builds a good name of the company and helps to ensure investors trust in the company CITATION Jam191 \l 2057 (Chen, 2019).