There are a few ways companies can reward shareholders with their excess cash: They can reinvest that cash back into the business to fund more growth or they can do our preferred method of rewarding shareholders and return that cash to investors as dividends. But there’s another method to rewarding shareholders that could help continue to boost the overall market and provide strong total returns.
We’re talking about stock buybacks.
Buyback activity is already surging in the post-pandemic world as the economy and earnings expand. And while there are some risks from tax increases on the activity, companies have continued to announce larger buyback plans for the new year.
For investors, these buybacks could provide a power upswing to the market in 2022.
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