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Assuming an investor owns the stock in a taxable account, dividends are taxed at ordinary income whereas if the stock appreciates due to stock buybacks, it could be taxable as a long-term gain (if held for more than a year).

https://mebfaber.com/2016/05/02/much-dividends-costing/

>>> In a taxable account dividends could have cost you anywhere from 0.3% to over 3.0% in returns PER YEAR since 1974.

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Interesting I always think of the "income vs capital gains" as a consideration for individual tax payers. I didn't realize it also pertained to corporate purchases of their own stock.

It does pertain to individual tax payers. Tax payers can either pay ordinary income on dividends or capital gains tax on the sale of share with increased value.

Even better is that as long as the shareholder holds, they have increased value, but can defer taxes.

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