Returning money to stockholders can be done by paying stockholders cash or stock dividends, or by implementing a stock buyback. The latter involves a company buying back some of its own stock. The cash and stock dividends are pretty much self-explanatory as the stockholders are sent a check for the amount of the dividend or are sent additional shares to cover the amount of the dividend.
T-Mobile’s shares have been in an uptrend for approximately a year. | Image credit-Google
With the stock buyback, the company places buy orders through a broker and will pay the prevailing price for the stock at the time the buyback begins. This reduces the number of shares outstanding and in theory, raises the value of the remaining shares. On Friday, T-Mobile said that it would spend as much as $14 billion by the end of 2025 buying back its own shares.
On Friday, T-Mobile shares closed the regular trading session at $231.94, a decline of $1.33 on the day. Still, that is more than $3 higher than the price that the stock closed at last Monday following Sievert’s comments which were made at the UBS Global Media and Communications Conference.
