An article in last week’s Investors Chronicle suggested that the high number of share buybacks was reducing the dividends paid – particularly by FTSE-100 companies. It suggested that there was a “recent frenzy for buybacks among UK listed companies” and I have certainly noticed this myself in my own portfolio holdings. I get very frequent notifications of buybacks as I monitor all RNS announcements from companies in my portfolio.
This is somewhat annoying as I always vote against share buyback, unless there is a very good reason to do otherwise. I would much prefer they reinvested in the business or paid surplus cash out as dividends. Many buybacks are misconceived – often on the notion that they will improve the share price by reducing the number of shares in issue. But that rarely works in practice.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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yes i agree