YCharts calculates buyback_yield as the net equity issued over the last twelve months divided by the market capitalization of the company. For instance, if a company has purchased 50 million dollars worth of its own stock and its market cap was 500 million, the buyback yield would be 10%. Warning: the market cap may rise or fall as a result —

Even though “outstanding share count” definitely reduces, share price may not rise as much as expected. Share repurchases usually increase per-share measures of profitability like earnings-per-share (EPS). These improved metrics will generally drive the share price higher over time, resulting in capital gains for the shareholders.

Buyback may indicate that the company doesn’t have any profitable opportunities to invest in, which may send a bad signal to growth investors.

— compare to dividend

Div is funded by profit. Buyback can be funded by debt

Div can cause an immediate price drop. In contrast, buyback has a long-term effect of boosting share price.

Buyback cuts shares outstanding, and usually increase per-share measures of profitability like earnings-per-share (EPS), and improve performance measures like ROE.

You’re not required to sell your shares when a buyback is initiated. If you keep your stocks, your percentage of ownership in the issuing company will increase as other investors sell theirs.

Retained earnings, for some companies, can be allocated to pay dividends or buy back shares in the open market. However, buyback (less often for dividend) can also be be funded partially by debt.

The main difference between dividends and buybacks — a dividend payment represents a immediate return, whereas a buyback represents an uncertain future return on which tax is deferred until the shares are sold.

Companies typically execute its share buyback program over a period of many months and at different prices, and can be suspended/postponed half way. In contrast, dividend is paid out in one go.

The buyback requires disclosures to stock exchanges and approvals from regulatory bodies. It also involves hiring investment bankers, which becomes an expensive affair for the company.

https://www.investopedia.com/articles/active-trading/073015/dividend-versus-buyback-which-better.asp has detailed illustrations.

— motivations
Companies with large buyback yields should be investigated closely. It could be signs of positive stock appreciation, management expectations that the stock is undervalued, attempts to thwart a hostile takeover, management’s favorable response to shareholders, among other reasons.

Management compensation is often pegged to stock price.

Stock options would benefit from buyback appreciations.