Conventional dividends are not true residual cash flows (which equity is supposed to represent) but rather fixed, sticky commitments that resemble bond coupons; historically, dividends were used to market stocks as bond-like instruments, but buybacks are more aligned with true equity residual cash flow logic.
causalpending
Speaker
Aswath DamodaranEvidence Quote
“Equity is supposed to be a residual cash flow. You get whatever's left over. And you look at conventional dividends, they're the exact opposite of residual cash flows. They're fixed, they're sticky.”
Source
Aswath Damodaran: I Am More Cautious Than Ever— The Master Investor Podcast with Wilfred FrostCreated: 8/12/2026, 6:41:25 PM
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