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When a company is profitable, they have a decision to make about what to do with those profits.

They can invest those profits back into the business to fuel future growth.

They can acquire another company, pay down debt, and or share the profits with investors

through the form of a dividend.

But there's another increasingly popular option.

Profitable companies can also elect to buy back their own stock from existing shareholders,

a process that's cleverly referred to as a stock buyback.

According to the Wall Street Journal, over the past five years,

large-cap U.S. companies

have spent nearly $4 trillion of profits repurchasing their own stock from existing investors.

While it may not be evident at first glance, stock buybacks are really nothing more than a

flexible dividend. They're a method of returning excess profits back to

shareholders. But unlike traditional dividends, buybacks don't get the same type of positive

attention. In fact, many suggest that stock buybacks are a form of market manipulation that

line the pockets of CEOs and hinder future growth of the company. Welcome to the Stay Wealthy podcast. I'm your host,

Taylor Schulte, and today in part three of our dividend investing series, I'm sharing everything that

you need to know about stock buybacks. Specifically, I'm sharing what a stock buyback is, how they

work, and how they might be more advantageous to investors than dividends. To view the research and articles referenced in

today's episode, just head over to you staywealthy.com forward slash 219.

Last year, during his State of the Union address, President Biden criticized companies for engaging

in stock buybacks, suggesting

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