Dividend Stocks Juicing Returns With Buybacks

There will always be a debate over which is a better method for returning cash to shareholders — dividends or stock buybacks. Happily for income investors hunting for dividend stocks to buy, there are plenty of companies offering both. True, dividends have some advantages over stock buybacks. They’re supposed to be a permanent feature of those dividend stocks you care to buy, whereas buybacks can come and go. On the other hand, dividends suffer from being taxed twice — first as corporate earnings, and then again as dividend income.

As long as price appreciation does its own part, dividend stocks benefiting from buybacks are almost turbocharged for total return. The last week alone brought news of three notable dividends stocks initiating or adding to their stock buybacks. Here’s a look at them to help decide if they’re the right dividend stocks to buy: American Airlines (AAL) said it will buy back $1 billion of its own stock. Altria (MO) was already something of a dividend champion. Johnson & Johnson (JNJ) posted Street-beating quarterly earnings, but a cautious forecast knocked 5 percentage points off JNJ stock over the next three sessions.

Source: InvestorPlace

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