Warren Buffett’s regret over paying dividends in 1967 led to a preference for share buybacks at Berkshire Hathaway. Tax laws favor long-term investors, making buybacks more beneficial over time. Buffett values dividends from companies Berkshire invests in, calling them “the secret sauce” for returns. However, buybacks are favored for companies with excess cash, provided shares are bought below book value. Ill-advised buybacks can lead to losses, as seen with Sears. Buffett’s rule of thumb is to buy back shares below 1.2 times book value. Ultimately, buybacks are favored if done wisely, benefiting long-term investors.

Read more at Nasdaq: Dividends vs. Share Buybacks: Which Is Better for Your Wallet?