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CFOs reassess dividends and share buybacks amid tax and market uncertainty

Chief financial officers are reconsidering how to balance dividends and share buybacks as changing tax policies, regulatory scrutiny, and market volatility complicate capital allocation decisions. While dividends provide shareholders with predictable income, they create recurring financial commitments that can strain liquidity during downturns. Share buybacks offer greater flexibility, allowing companies to adjust distributions according to cash flow, market valuations, and strategic priorities, although repurchases carry valuation risks and face U.S. excise taxes. Companies including Shell and JPMorgan Chase have adopted strategies combining regular dividends with substantial repurchase programs, with JPMorgan authorizing a $50 billion buyback. The article recommends that CFOs evaluate shareholder tax implications, maintain adequate liquidity reserves, conduct financial stress tests, and apply disciplined valuation criteria to repurchases to protect balance sheets while delivering sustainable shareholder returns.

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