Dividends and buybacks are equivalent sources of cash flow to equity investors; both should be counted equally in valuation because whether dividends or buybacks reach your pocket depends on whether you sell shares or hold, making the choice between them a matter of corporate governance preference, not fundamental cash flow value.
causalpending
Speaker
Aswath DamodaranEvidence Quote
“If you look at I mean, the the experiment that I I ask people to run is let's assume you are the only owner of all stocks in the market. Right? That's basically what we're doing when we're doing an implied equity risk premium. Well, guess what? Dividends and buybacks both go into your pocket because they're both cash flows to you as equity investors.”
Source
Aswath Damodaran: I Am More Cautious Than Ever— The Master Investor Podcast with Wilfred FrostCreated: 8/12/2026, 6:41:25 PM
My Notes
Loading notes...