Buybacks Over Dividends? These 2 Stock Picks Make a Strong Case

Core Viewpoint - The article discusses the advantages of stock buybacks over dividends as a method for companies to reward shareholders and enhance their growth potential [2][4][5]. Group 1: Stock Buybacks vs. Dividends - Stock buybacks are considered a more efficient way to reward shareholders compared to dividends, as they are not subject to double taxation [4][5]. - Dividends reduce a company's ability to reinvest in growth opportunities, while buybacks increase each shareholder's ownership percentage [5]. Group 2: Bank of America - Bank of America has announced a new stock buyback program worth $40 billion, indicating a positive outlook for the bank despite a recent stock rally of 11.5% [8][10]. - Institutional investors have increased their holdings in Bank of America, with one firm doubling its position to $151.5 million, representing about 15% of institutional buying this quarter [9]. - Analysts project a 19% increase in earnings per share (EPS) for Bank of America, forecasting $1.06 for Q2 2026, up from $0.89 [12]. Group 3: Dollar Tree - Dollar Tree has initiated a $2.5 billion stock buyback program amid improving trade tariff negotiations, contributing to a 38% stock price increase over the quarter [14][13]. - Despite a consensus "Hold" rating, some analysts view Dollar Tree as an "Overweight" with a target price of $138, suggesting a potential upside of 20% from current levels [15].