Share buyback

As well as issuing new shares, companies sometimes buy back existing ones.

There are two main ways for a company to return cash to its shareholders (other than selling itself and returning the cash to its owners). One is to pay a dividend. The other is for the company to use the money to buy back its own shares and cancel them. This leaves the shareholders who don't sell with a bigger chunk of the company than before.

So you could argue that if an investor reinvests their dividends, and that buybacks and dividends are treated equally by the tax authorities (not always the case), and that they happen at the same time, then they are the same thing. The end result is that the investor owns a bigger chunk of the company than before.

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