The cash savings from reduced dividend payments resulting from a stock repurchase strategy can allow the company to increase its dividends for remaining shareholders.

Question

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When a company repurchases its own shares, it reduces the number of outstanding shares and therefore reduces the total amount of dividends that need to be paid out. This can potentially free up cash for the company to increase dividends for remaining shareholders.

The Cash Savings from Reduced Dividend Payments Resulting from a Stock