What is a stock buyback and how does it help shareholders?

Updated November 15, 2026 · examples use today’s data

In a buyback the company uses its cash to purchase its own shares and cancel them. The business stays the same, but each remaining share owns a bigger slice of it.

A real example

Apple has reduced its share count by about 2.4% a year over the last three years. Its buyback yield, the cash spent on repurchases as a share of market value, is about 1.7%.

When buybacks help

A buyback creates value when the shares are bought below their intrinsic value and paid for with genuine free cash flow. It destroys value when the company overpays, borrows to do it, or simply offsets shares handed out as employee pay.

Gross vs. net

Always check whether the share count actually falls. Many tech companies buy back billions of dollars of stock but issue nearly as many new shares to employees.

Frequently asked questions

Are buybacks better than dividends?

Neither is better in itself. Buybacks at a fair price are tax-efficient; dividends give you cash without having to sell.

What is shareholder yield?

Dividend yield plus buyback yield: the total cash returned to owners as a share of the market value.

Tools for this

Buyback stocks Stock screener

Keep learning

What is the P/E ratio and how do you use it?What is earnings per share (EPS)?What does TTM (trailing twelve months) mean?What is an ETF and how is it different from a stock?What is a dividend and what is dividend yield?What is compound interest and why does it matter so much?

Educational content, not investment advice. Figures in the examples come from company filings and market prices and update automatically.