The decision of how much cash a business can return to its owners should be the simplest of the three corporate finance decisions, but in practice, it is often dysfunctional due to deeply held and misguided views of what returning cash to shareholders does to a business. In a utopian world, dividends should represent the end effect of all choices, with companies starting with their cash flows from operations, supplementing them with debt, investing in good projects, and returning the leftover cash as dividends or buybacks. However, in reality, dividends are often sticky, with companies hesitant to change them, and this stickiness has created several consequences, including firms being cautious in initiating dividends and companies that start paying sizable dividends but cannot bring themselves to cut them even when their businesses deteriorate.The choice between paying dividends and buying back stock has shifted in recent years, with companies, especially in the United States, moving away from a policy of returning cash almost entirely in dividends to one where the bulk of the cash is returned in buybacks. This shift is partly due to tax benefits to investors, the rise of management options, and shifting tastes among institutional investors, but primarily because sticky dividends have outlived their usefulness in a business age where fewer and fewer companies feel secure about their earning power.In 2024, companies across the globe returned $4.09 trillion in cash to their shareholders, with $2.56 trillion in dividends and $1.53 trillion in stock buybacks. The bulk of this cash was returned by money-making firms, with financial service firms being the largest dividend payers, and technology companies leading the sectors in buybacks. The United States accounted for a large segment of cash returned by all companies, with $1.5 trillion in dividends and buybacks.The cash return decision is interconnected with investment, financing, and dividend decisions, and companies should compute potential dividends by looking at cash flow elements, including depreciation, non-cash charges, investment needs, and cash flow from debt. However, in practice, companies often deviate from this rational policy, and the cash return decision is often driven by inertia and me-tooism.The shift away from dividends to buybacks is not just a US phenomenon, and it is likely to be seen across the world as companies face increasing earnings variability and unpredictability. Buybacks have the potential to transfer wealth from one group of shareholders to another, but they do not create or destroy value.