Is Best Buy's Buyback the Best Use of Cash?

Best Buy's (BBY_) new buyback program and dividend hike may not be the best way to utilize cash.

The electronics' retailer is basically paying investors to wait, announcing a $5 billion buyback of its common stock on Tuesday and raising its dividend by 7%. The buyback replaces a $5.5 billion program that had about $800 million left as of May 28.

Best Buy has reduced its share count by 94 million shares since the authorization of its prior repurchase program in June 2007, and by about 35 million shares over the past year.

"This authorization is evidence the current pace of share repurchase activity will continue in the near term, in our opinion," Stifel Nicolaus analyst David Schick wrote in a note.

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- Posted: 2011-06-21 09:55:06

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