In their efforts to balance short-term investor expectations with long-term strategic goals, The Boston Consulting Group (BCG) warns companies to avoid cash traps that can negatively impact near-term shareholder returns. One of which is the The Stock-Buyback Trap. BCG doesn’t discount the role that stock buybacks can play in boosting near-term returns for some companies. But the firm’s research indicates that buybacks do not change investors’ estimates for long-term earnings-per-share growth, or induce them to accord a company a higher valuation multiple. By contrast, it says, dividend growth has a far more positive long-term impact.

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