Musings on Markets · 2026-02-24
· 100d
Corporate Cash Return Policy: Dividends vs. Buybacks in 2025
Analysis of how firms decide on cash returns to shareholders through dividends or buybacks, arguing that dividend policy is dysfunctional due to inertia and peer-group conformity. The author advocates for flexible buybacks over sticky dividends, supported by data showing buybacks comprising over 60% of cash returns in the last decade.
Metrics in this report
Buyback Share of Total Cash Returns
60+%
minimum
US companies, last decade
Dividend Maintenance Rate
100%
annual observation
Years where dividend-unchanged companies exceeded dividend-changing companies, 1988-2025