Since the 1990s, U.S. companies have returned more capital through stock buybacks than dividends. An investor focused solely on dividend yield is missing the larger part of the shareholder return story and cannot accurately assess a company's total capital allocation strategy.

Unlike other sectors, share buybacks are rare for REITs because management prioritizes maintaining low leverage to please debt rating agencies. When a conservative REIT does initiate a buyback, it's a strong signal that management believes the stock is significantly undervalued, as they are willing to risk a negative watch from those agencies.

During a market crash, Henry Singleton stopped acquiring companies and did the opposite: he used cash to buy back 90% of Teledyne's stock. While Wall Street saw this as failure, it was a rational trade—repurchasing his own company's earnings at a low multiple—which caused earnings per share to explode.

Companies termed "share cannibals" aggressively repurchase their own shares, especially when undervalued. This capital allocation strategy is often superior to dividends because it transfers value from sellers to long-term shareholders and acts as a high-return, low-risk investment in the company's own business.

NVR's strategy of not owning land was the ultimate stress test. While competitors faced billions in write-downs on depreciating land assets during the Great Financial Crisis, NVR's balance sheet was protected, allowing it to remain profitable.

NVR avoids the high capital costs and risks of land development by using purchase options instead of buying land outright. This asset-light approach, combined with pre-selling homes, generates extremely high returns on capital in a typically commoditized, capital-intensive industry.

Profitable, self-funded public companies that consistently use surplus cash for share repurchases are effectively executing a slow-motion management buyout. This process systematically increases the ownership percentage for the remaining long-term shareholders who, alongside management, will eventually "own the whole company."

NVR avoids the balance sheet risk of land ownership by using Lot Purchase Agreements (LPAs). It pays a 10% deposit for the option—not the obligation—to buy land, protecting it from downturns and freeing up capital for massive shareholder returns.

Competitors can't easily copy NVR's superior capital-light model. Doing so would require them to divest billions in existing land inventory at a loss and accept lower short-term growth, which Wall Street would punish. This inertia protects NVR.