Buybacks or stock buybacks are when a public company decides to purchase back its own shares, decreasing the number of available shares on the open market. Buybacks 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 slightly more for a stock with slightly higher earnings per share. When you hold a stock in your personal, taxable account and it pays a cash dividend, you have to pay tax on the dividend in the year in which you receive it. When a company initiates a buyback program the dividend isn’t distributed (and subject to tax) but the share price tends to rise and boost investor returns. This added opportunity for tax deferral may not seem like much of an advantage in any single year.
However, the magic of compound interest applies to that tax deferral. It can add up to a huge advantage over a decade or two. The advantage expands all the more if you hold off on selling until you need the money. That holding period may even last until you retire, when your income tax rate is likely to be much lower. We think investors should be just as excited for buyback programs as dividends. Enhance your stock market returns by following TSI Network and using our three-part Successful Investor strategy:
Our new report, 10 Stocks to Buy and Hold Forever, identifies 10 stocks you can hold for the long term and shows you exactly how to profit from a portfolio that’s built to last. And it’s yours FREE!
CGI INC., $127.47, Toronto symbol GIB.A, is your #1 Aggressive Buy for 2023.
The stock lets investors tap Canada’s largest provider of computer outsourcing services. It helps its clients automate certain routine functions like accounting and buying supplies. That makes companies more efficient and lets them… Read More
A recent split-off transaction will help support 3M Company’s share buyback plan as it looks to restore revenues and cut costs despite weaker demand.
The dividend has just been raised. Meanwhile, the stock trades at just 11.9 times the company’s 2023 earnings forecast.
 How Successful Investors Get RICHLearn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' for FREE from The Successful Investor. How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger. |
3M COMPANY (New York… Read More
For 2023, we once again chose CGI Inc. as the #1 Aggressive Stock of the Year for our flagship newsletter, The Successful Investor.
This is the seventh year in a row that we’ve picked CGI—Canada’s largest provider of computer outsourcing services.
Investors who were quick to act… Read More
TORONTO-DOMINION BANK, $83.77, Toronto symbol TD, is a buy.
The lender raised your quarterly dividend with the January 2023 payment by 7.9%. Investors now receive $0.96 a share instead of $0.89. The new annual rate of $3.84 yields a high 4.6%.
In March 2022, TD agreed to… Read More
New contracts and a growing contract backlog contributed to an 11.6% revenue gain for CGI during the most-recent quarter.
Growing demand for the company’s efficiency-enhancing services is reflected in a healthy book-to-bill ratio of 108.9%.
Meanwhile the stock trades at 18.5 times the company’s 2023 earnings forecast.
How Successful Investors Get RICHLearn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' for FREE from The Successful Investor. How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger. |
CGI… Read More
A: Illinois Tool Works, $237.39, symbol ITW on New York (Shares outstanding: 305.1 million; Market cap: $72.8 billion; www.itw.com), is a multi-industry manufacturer operating in over 53 countries. Known as ITW, the company’s diversified range of industrial products includes aerospace technology, bridges, wind turbines, restaurant… Read More
A: Baytex Energy Corp., $6.08, symbol BTE on Toronto (Shares outstanding: 544.9 million; Market cap: $3.3 billion; Resources sector; TSINetwork Rating: Extra Risk; www.baytexenergy.com), explores for, develops and produces oil and gas in Western Canada and in the Eagle Ford, Texas region of the U.S…. Read More
CANADIAN NATIONAL RAILWAY CO., $160.66, Toronto symbol CNR, is a buy.
CN operates Canada’s largest railway. Its 29,900-kilometre network stretches across the country. It also travels down through the U.S. Midwest, connecting Canada to the Gulf of Mexico.
Starting with the March 2023 payment, CN will raise… Read More
CANADIAN PACIFIC RAILWAY LTD., $106.04, Toronto symbol CP, is your #1 Conservative Buy for 2023.
CP ships freight over a 23,700-kilometre rail network, mainly between Montreal and Vancouver. It also links to hubs in the U.S. Midwest and Northeast.
The company is now in the process of… Read More
MCDONALD’S CORP., $272.46, New York symbol MCD, is your #1 Conservative Buy for 2023.
The company is the world’s largest fast-food chain with over 40,000 restaurants in 119 countries. It serves a wide variety of food but is best known for its hamburgers and french fries.
In… Read More
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What personal information do we collect?
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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
The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
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