Professor Damodaran looks at the decision by businesses on how much cash to return to their owners, and in what form (dividends or buybacks), and how that decision played out globally in 2025. He argues that dividend policy, more than any other aspect of corporate finance, is dysfunctional both for the firms that choose to return the cash and the investors who receive that cash.
Data Update 8 for 2026: Time for Harvesting – Dividends and Buybacks
Aswath Damodaran
Research
9 Pages
Key Takeaways
Dividend stickiness: Dividends rarely adjust downward, so firms protect payouts even when business conditions change.
Buyback flexibility: Repurchases let firms scale cash returns up or down without the signaling baggage of dividends.
Harvesting lens: Returning cash is not failure, it is what mature value creation is supposed to produce.
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