They’re one of the most tax advantaged way to return money to shareholders. That’s it. I don’t like this method or the need, but the motivation isn’t rooted in lack of innovation etc. Friedman doctorine has become gospel, so this is the result.
The only practical difference is you pay taxes on the dividends when you receive them, and taxes on the capital gains when you sell.
Investors expecting a return on their investments? How awful!
Google for example could have really invested in Google Fiber or taken a similar capital intensive project instead of returning 100's of billions of dollars.
Alternatively could be growing inorganically through acquisitions. The largest acquisition Google has done is only for $12.5B of Motorola in 2011. Only one of top 5 acquisitions is in this decade ( Mandiant) and top 5 combined they spent only $25B
Compare that to say Microsoft who are spending $70B on Activision, $10B on OpenAI, also bought Github($8B), Nuance($20B) just in the last 5 years.
Google simply doesn't seem to have any ideas on how to spend money.
[1] Buybacks give you the same choice as well, but they are not increasing the total value through investments to do so, just reducing the number of shares in circulation.
Some days it's wisest to wait until you're ready.
In a sibling post I talked about Google's inability to spend, this is also true for old school Blue chip companies like say Oil& Gas, they have had enormous record profits last couple of years and while they have for good reasons not doing lot of new wells[1] they have not not also done much green energy investments either.
[1] Financially sound not do so, given the long term prospects of oil are not great, and short term price fluctuations are not good decision basis for 30+ year projects new drilling entails.