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What are the most important differences between paying dividends and declaring a stock repurchase?

What are the most important differences between paying dividends and declaring a stock repurchase?

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Answer #1

Dividend is the amount given to shareholder from the earning of the company. It is distributed to shareholder after paying tax hence shareholder has no tax liability. Also paying dividend does not affect the number of share outstanding and hence the EPS.

Whereas when a company repurchase its share then number of outstanding share decreases and hence EPS increases and decrease P/E rartio which ultimately increases the value of share. Also the tax will be paid by shareholder only when they sell their share

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