In what way do dividends generally differ from share repurchases regarding their effect on shareholders?

Dividends are cash payments made to shareholders, typically reflecting a portion of a company's earnings, which directly affects the cash flow of the shareholders receiving them. When a company declares its dividend, it directly impacts the overall cash flow of its shareholders, as they receive this cash payment as a return on their investment.

In contrast, share repurchases involve the company buying back its own shares from the market, which can increase the value of the remaining shares and potentially affect ownership percentages, but it does not provide immediate cash to the shareholders who do not sell their shares back to the company. Thus, the immediate effect of dividends on shareholders is relevant to the cash flow they realize, distinguishing it from the effects of share buybacks.

While dividends can fluctuate based on a company's policy and financial performance, the primary distinction revolves around the immediate implications for shareholders' cash flow, which is why the correct choice focuses on that aspect.