One-Third of Investors Favor Dividends Over Share Buybacks

This week’s Sentiment Survey special question asked AAII members for their opinion about the capital that companies are allocating to share buybacks versus growing (or paying) a dividend. One-third of all respondents (33%) say they prefer companies to pay dividends and/or grow their dividends. About 11% of respondents express a negative view of buybacks, while an additional 6% express concern about buybacks being carried out when stock prices are high. Approximately 22% of respondents say they were fine with both buybacks and dividends or otherwise think companies should have the flexibility to choose between the two. Slightly more than 7% like or are otherwise in favor of buybacks.

Here is a sampling of the responses:

• “As a dividend investor, I much prefer to see a growing dividend. I don’t really see share buybacks as having any long-term benefit to a stock’s price.”
• “Growing the dividend is much more important for many senior investors.”
• “Depends on the individual company’s financial position and objectives. I’m generally positive about buybacks.”
• “I would prefer a dividend but understand the internal benefit of the buyback.”
• “Buybacks often occur at market highs. Give me the dividend please.”

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