And share buybacks are just a tax-efficient version of dividends (since they don't trigger a taxable event for the investors that don't want to convert shares to cash yet).
It's easy to say 'you should be investing that capital into projects.'
But I think people don't realize how much money is actually generated by some of these companies.
I know AAPL is the strongest possible case for my argument, but bear with me.
Their operating cash flow net of CAPEX is ~$65B as of their 2018 year ending in September. I.e., after paying for all of the investments they want to make, they still have $65B in straight up cash left over.
I mean -- what are you supposed to do with all of that?
Therefore the issue isn't so much Apple not being able to find better opportunities than shareholders, but that it can't find better opportunities than Apple -- making those actually good investments would look bad for Apple because of how absurdly profitable it is. That's not a good reason to return capital, if you think about it carefully.