There are a number of ways in which a company can return wealth to its shareholders. Although stock price appreciation and dividends are the two most common ways of doing this, there is also something called shareholder buybacks.
Buybacks are a less direct way of returning cash to shareholders, explains Hardeep Walia, founder and CEO of Motif Investing.
Under a share buyback, a company purchases a certain number of its own shares. It may do this on the open market, like everyone else, or by making a tender offer to shareholders, usually at a slight premium to the market price, explains Walia.