• Buybacks are touted as “returning cash to shareholders”. That's tosh! You can't get your cash from a buyback unless you sell your shares. Buybacks favour those who would sell their shares. Dividends go to those who wish to remain as shareholders. I'd rather receive a dividend than sell off 4% of my shares every year.
• When selecting companies for purchase, besides dividend growth records, go for firms that are not big allocators of cash in stock buybacks.

• “If companies have generous stock option schemes for top executives, the programs could easily be construed as being, at least in effect if not in design, cover-ups about the real cost of such dilution, and as extra enrichment to insiders by financing the purchase of their low cost shares at higher prices.” Don Coxe, Basic Points, September 2011

This page is a work in progress. I'll add to it from time to time.

• What's important is 'net' buybacks. Are executives covering the options issued to themselves? This is the concern. Here's how John Hussman put it in his October 11 2010 letter: “Some would also argue that share repurchases should also be counted as dividends, but as the function of share repurchases is largely to offset the dilution that results from options grants to employees and corporate insiders, I strongly disagree.”
• I'd much rather have a dividend. There's a long-term commitment with a dividend. Buyback commitments, publicly announced, can be quietly withdrawn.
• “Beware the Buyback Craze” was a Barron's headline on January 22 2011. “Buybacks are widely believed to benefit investors.” Barron's said. “But there's scant evidence they do more for stock prices than produce small, short pops.”

• Buybacks do NOT mean you have to sell your shares to them: the shares are purchased in the open market by the company. And, generally, they are purchased at too high a price. Over the last 15 years (according to the Economist Jan 11 2012), when were the most buyback made? near the market high in 2008.

• “If they occur below intrinsic value, stock buybacks can be an attractive signal.” Spears of Tweedy,Browne, September 21 2010, Barron's

• Think about share repurchases this way. Are banks willing to wait years to be paid interest? With the 'new normal', shares might not increase in value for a long, long time. Dividends, in contrast, are cash in hand. Dividends can be banked, spent as retirement income or re-invested in a different company.