Stock buybacks, also known as share buybacks, are when a company purchases outstanding shares of its own stock on the open market. Share buybacks typically raise the value of a given stock holding. Stock buyback programs also raise a company’s earnings per share. It’s simple arithmetic: buybacks reduce the number of shares outstanding. To get earnings per share, you divide total earnings by the number of shares outstanding. When you reduce the divisor-because the company has fewer shares outstanding, due to stock buybacks-the calculation gives you a higher number for earnings per share.
On the whole, buyers are willing to pay more for a stock with higher earnings per share. The funny thing is that, just as investors tend to underestimate the value of a buyback, they overestimate the value of a dividend reinvestment program. They put a high value on the fact that they can reinvest their dividends automatically, without paying brokerage commissions. They fail to recognize that brokerage commissions are now at historic lows. They also overlook the fact that they have to pay taxes on the full dividend each year they receive it, even if they reinvest it. That tax hit and the loss of an opportunity for tax-deferred compounding greatly outweigh what they save on brokerage commissions.
Don’t get us wrong-cash dividends are a definite plus-buy don’t overlook stock buybacks. Stock buyback can be huge win for investors. And you can make even bigger gains in the market by following TSI Network and using our three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
As competition in most industries increases, many companies plan to spend more money developing new products in the next few years. These costs hurt their earnings, but could lead to higher sales for years to come.
Most companies also plan to spend more advertising and marketing… Read More
BANK OF NOVA SCOTIA $45 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s third-largest bank, with total assets of $325.0 billion.
The bank has the highest international exposure of the big five Canadian banks, and now gets nearly 30% of… Read More
Canadian bank stocks have moved down in recent weeks, mainly due to fears that rising interest rates will hurt demand for mortgages and other loans. While that is a possibility, the banks are in a much better position to handle a drop in loan volumes… Read More
IMPERIAL OIL $116 (Toronto symbol IMO; SI Rating: Average) is Canada’s largest integrated oil company, with operations in all phases of the petroleum industry.
In the three months ended March 31, 2006, Imperial’s earnings rose 58.4%, to $591 million or $1.79 a share, from $393 million… Read More
SUN LIFE FINANCIAL SERVICES $49 (Toronto symbol SLF; SI Rating: Above average) offers savings, retirement, pension and life and health insurance products and services to individuals and corporate customers. The company operates primarily in Canada, the U.S. and the UK, and also in Asia and… Read More
ARKANSAS BEST CORP. $44 (Nasdaq symbol ABFS; WSSF Rating: Average) specializes in long-haul, less-than-truckload (LTL) shipping services, which combine freight from several different customers into a single truckload. LTL accounts for roughly 90% of Arkansas Best’s revenue.
Freight carried by the company includes food, textiles, apparel… Read More
Our Wall Street Stock Forecaster approach has three key rules: 1. invest mainly in well-established companies; 2. spread your money out across the five main economic sectors (we provide sector classifications in our monthly Portfolio supplements); 3. focus on stocks that are out of the… Read More
THOMSON CORP. $41 (Toronto symbol TOC; SI Rating: Above average) provides a wide range of specialized information to financial, medical, legal and scientific professionals, mainly through electronic channels such as the Internet. Unlike Torstar and Transcontinental, Thomson gets only a small portion of its revenue… Read More
The Internet has disrupted the historic business model of newspaper publishers and other information providers, competing against them for both readers and ad revenue.
Thomson was early among media firms to recognize the change and adapt to it. That’s one reason why it was a favourite… Read More
CANADIAN IMPERIAL BANK OF COMMERCE $76 (Toronto symbol CM; SI Rating: Above average) is Canada’s fifth-largest bank with $280.4 billion in assets.
In August 2005, the bank set aside $2.8 billion (or $7.45 a share) to cover various lawsuit settlements related to its dealings with bankrupt… Read More
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
This privacy policy is applicable to all TSI Network Visitors, Clients, Employees, Suppliers, Web sites, Management, and all other interested parties. Any links to or from our site are not covered by this policy. We encourage you to read the privacy policies of every site that you visit.
The privacy of the site/store visitor is very important to TSI Network, and is respected at all times. The information we receive from customers helps us to personalize and continually improve your online experience at TSI Network.
We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
We store subscriber and password files containing personal information securely. These files are stored in secure areas that are not accessible to the general public. We are always working to ensure the security of your personal information.
We are continuously in the process of improving our sites and services. If any new features or policies require a change to this current policy, we will post a clear notice of this change on pages of our site where the privacy policy appears. The principle behind this privacy policy is to collect information with your knowledge and consent.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
Information You Give Us: We receive and store any information you enter on our website or give us in any other way through sign-up forms or ordering forms for publications and services. You can choose not to provide certain information, but then you might not be able to take advantage of many of our services and features. We use the information that you provide for such purposes as responding to your requests, customizing your web browsing experience for you, improving our website, and communicating with you.
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We do reserve the right, however, to collect and perform statistical analyses of the internet traffic to our website for our internal use. However, information collected does not allow us to identify any individual, and will not collect any personal information of the visitor. Furthermore, we do not sell, rent or loan to any outside parties the information collected and analyzed.
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Does TSI Network Use the Information It Receives?
"Contact Us" and Comment Features: TSI Network encourages visitors to its websites to contact us with questions and comments. Email addresses and other information of persons using these features may be collected in order to facilitate our responses to those inquiries.
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TSI Network does everything possible to prevent unauthorized intrusion to its websites and the alteration, acquisition or misuse of personal information by unauthorized persons. Notably passwords submitted by users of our websites are encrypted using encryption mechanisms. However, TSI Network cautions visitors to its websites that no network, including the Internet, is entirely secure. Accordingly, we cannot be responsible for loss, corruption or unauthorized acquisition of personal information provided to our websites, or for any damages resulting from such loss, corruption or unauthorized acquisition.
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What Choices Do I Have?
Changes to this Policy
This Policy is the sole authorized statement of TSI Network's practices with respect to the collection of personal information through TSI Network's websites and the subsequent use and disclosure of such information. Any summaries of this Policy generated by third party software or otherwise (for example, in connection with the "Platform for Privacy Preferences" or "P3P") shall have no legal effect, are in no way binding upon TSI Network, shall not be relied upon in substitute for this Policy, and neither supersede nor modify this Policy.
TSI Network may revise this Policy from time to time.
Legal Notices and Disclaimers
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