Difference Between Dividend and Share Buyback

Basis	Dividend	Buybacks
Meaning	The dividend is a reward paid to the shareholders out of profit.	Buyback is repurchasing the shares from shareholders at a specified price.
Frequency	Paid at regular intervals (ed. quarterly, half-yearly or annually)	Irregular in nature
Beneficiary	Existing Shareholders	Surrendering Shareholders
Impact on Cash Flow	Directly affects the cash flow and contributes to cash outflow.	Uses cash reserve anthe d impact on cash flow is spread over time.
Impact on shareholding	Does not affect the holding of shareholders	Reduces the shareholding of shareholders.
Impact on Capital Structure	Reduces retain earning and profit	Affects the capital structure and reduces the outstanding shares
Taxability	Taxable in the hand of the individual shareholders	No immediate tax implied
Investor Preferences	Attracts income-seeking investors	Attracts investors seeking potential capital gains
Market Conditions	Dividends are stable and not affected by market conditions	highly influenced by market conditions

Buyback of Shares : Process, Reasons, Impacts & Example