There are several ways that a company can return wealth to its shareholders. Price appreciation and dividends are the two most common ways, but there are other ways a company can introduce returns to buyers. One method that is less common, or overlooked, is share buybacks.

Here we are going to take a look at what a stock buyback is, how it can affect a stock’s price and what it means for investors. We’ll also give a look at companies that have recently announced buybacks. 

A stock buyback, also known as a share repurchase, occurs when a company buys back its shares from the marketplace with its accumulated cash. A stock buyback is a way for a company to reinvest in itself. The repurchased shares are absorbed by the company, and the number of outstanding shares on the market is reduced. This makes the relative ownership stake of each investor increase, as there are now fewer shares on the market. 

Here are some companies that have recently announced large buybacks: