Two big stock buybacks revive a debate

Mark Garrison Sep 22, 2016
HTML EMBED:
COPY
Jewel Samad/AFP/Getty Images

Two big stock buybacks revive a debate

Mark Garrison Sep 22, 2016
Jewel Samad/AFP/Getty Images
HTML EMBED:
COPY

Two big companies are setting fistfuls of money aside to buy up their own stock. Microsoft has announced a $40 billion buyback program, while also jacking up its dividend. Target plans a $5 billion buyback. Those are on top of existing multi-billion dollar share buybacks already happening at both companies.

When public companies have lots of money lying around, they can invest it to help the company grow. Or they use it to make shareholders happy, either in the form of stock buybacks, or paying juicier dividends. Investors prize dividends right now, with bonds not paying what they once did. Buybacks attempt to raise the stock’s price by buying up a lot of shares. They can also be a way to make earnings reports look better.

Wall Street tends to like buybacks, but the tactic has critics. They say the economy fares better when corporate profits are spent investing for growth, rather than buying back stocks.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.