Data Update 7 for 2023: Dividends, Buybacks and Cash Flows

This article analyzes dividend policy and share buybacks as mechanisms for returning cash to shareholders, arguing that both are legitimate tools whose use should be guided by free cash flow to equity (FCFE) and corporate lifecycle stage. The author debunks common misconceptions about buybacks—that they create or destroy value, are debt-financed, harm economic growth, or are unfair to stakeholders—and provides empirical evidence that buybacks have become the dominant cash-return mechanism in US and increasingly global markets.