Stock Buybacks

No cameras are permitted. No transcripts are available. Only shareholders may attend. But we have a ringside seat at the Berkshire Hathaway annual meeting. Here's what Warren Buffett, the Oracle of Omaha said in this year's Q&A.

This weekend, more than 40,000 of Warren Buffett's disciples will descend on his hometown for Berkshire Hathaway's annual shareholder meeting, where, among other things, they'll take part in a marathon Q&A session with the Oracle of Omaha himself. Here are three subjects sure to come up.

Walgreen, the leading U.S. pharmacy chain, recently increased its quarterly dividend by 28.6%, the largest increase in the company's 110-year history, from 17.5 cents a share to 22.5 cents a share. But is it giving away cash it's really going to need for its expansion plans?

Last year saw a surge in stock repurchases -- companies like ExxonMobil, Walmart and Microsoft bought back shares at record levels. Buybacks can be seen as a cash giveaway to investors, and they boost earnings per share. But there's a strong reason to be wary of companies that do buybacks.

The Federal Reserve is finally admitting that not all the big banks are healthy: Bank of America won't get to pay increased dividends. But none of those financial giants should be allowed to, and a logical look at the reasons they say they want to dole out the cash makes it totally clear why.

Retailers forecast that 2011 will be a year spent dealing with inflation, expanding stores and trying to wean shoppers off their markdown habit. Faced with rising costs that are pushing their prices higher, merchants say they have to focus on growing sales, regardless of the economic pressures.

Companies that have piled up cash over the past few years are finding one good use for it: Repurchasing their own shares. January alone saw $57 billion in buybacks, compared with $357 billion for all of 2010. While buybacks don't add value, they do give investors more options.

Helped by the expansion of its industrial business, General Electric expect to boost its revenue in fiscal 2011, CEO Jeff Immelt said in a presentation to investors Tuesday.

Over the last three years, companies that either hiked dividends or initiated stock buybacks -- both meant to raise price per share -- lost an average of more than 10% in stock price. But cash-rich companies that did both lost more than 21%.

In a sign that consumer spending may be on the rebound, Visa on Wednesday reported its fiscal fourth-quarter profit jumped 51% from a year ago. But shares fell after the company released disappointing guidance for the next year.