Initially I felt good about the buyback. $182M at today's price of $6.45 has the potential to retire 28M shares of the 865M outstanding. However if spent on dividends, $182M would pay out an additional .20/yr (865/182 = .21). I gotta believe that a 100% + increase in annual dividend payment per share is a bigger attraction than the potential of retiring 3.2% of shares.
HBAN currently has a dividend yield of 2.7%. A $.20 increase would push it to 5.5% which would have attracted many dividend seeking investors.
The corporate advantage to announced buybacks vs. declared dividends is that unlike dividends, you are not required to spend a dime.
Agreed. The share buy backs show the company is financially strong and doing well. Hence, the reason for the stock price to go up since the announcement as, perhaps, not a single share may have been bought back. And may not be within the next twelve months. The bank will necessarily exercise this option when the price goes down which, in turn, will keep the stock price stable maintain a strong market cap. It is basically, for me, a market related psychological move.