Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day.

It's Monday, October 9th, and we're talking about capital allocation, or, put a different way, what gets companies and investors paid. I'm your host

Michael and I'm joining the studio by fool.com's Matt Frankel. Matt thanks for

being on the show today. Thanks for having me. It gives me occasion to where my headset was here.

Awesome.

All right, so we had a listener question, by the way, thank you for writing in about

buybacks and dividends.

And this was spurred by last week's discussion on whether banks

should be able to chart their own course on buybacks and dividends or whether they should

ask the federal government for permission.

And the question basically came down to, well, our share buybacks and for that matter, dividends, a good thing. question,

for that matter, dividends, a good thing.

Great question, by the way folks, if you ever have any questions based on any of our episodes,

Industry Focus at fool.com.

We thought we'd address that issue even more broadly by looking at the video. episodes, Industry Focus at full.com.

We thought we'd address that issue even more broadly by looking at capital allocation

across the board.

So companies can spend money generally speaking in one of four ways.

They can do share buybacks. They can institute a dividend. They can do mergers in acquisitions, which we call inorganic growth.

Okay, you're buying growth. And they can do organic growth or think of it as homegrown growth like when a business

decides to go into a new business line or in some other way try to create growth

without buying it from somebody else. But when does each make sense?

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