What is one primary difference between share repurchases and dividends?

Dividends do not affect ownership percentages because they distribute a portion of a company's earnings to shareholders in cash or additional shares without altering the overall number of shares in circulation. When a company declares a dividend, it pays out a certain amount per share to all existing shareholders. This action does not change the proportion of ownership that each shareholder has, as all shareholders benefit from the same payment per share.

In contrast, share repurchases involve the company buying back its own shares from the market, reducing the number of shares outstanding. As a result, the remaining shareholders own a larger percentage of the company after the buyback, because the overall equity is now divided among fewer shares. This difference in impact on ownership structures is a key distinction between the two methods of returning value to shareholders.