Share buybacks are now a standard tool in achieving capital efficiency. Europe's combined buyback and dividend yield is higher than that of the US. 

Key points

  • Share buybacks increase scarcity value, and this is playing a role in the current high valuations in the US. 

  • Share buybacks are a cyclical indicator; buyback indices outperform the dividend aristocrats’ indices during expansion phases of the economic cycle, and the reverse is true in downward phases. 

  • Buyback announcements provide positive signals to investors but can also deliver wrong signals if they are made at the peaks of share price performances.

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