Dividends are cash payment to share holders in proportion to the number of shares you own. A share repurchase or 'buy back' is the process of tender of shares for repurchase by the company. The difference between repurchasing shares or paying dividends comes down to tax. In Australia if you own shares in a company for more than a year, the Capital Gains Tax on the sale is halved, making a 'buy back' seem more attractive.
However, there are also advantages and disadvantages of a share repurchase. Firstly a 'buy back' can be used to change the firms capital structure without increasing the debt load. Secondly, it can be a good indicator that management believe the price of the shares may be too low (keep in mind these people know the company better than anyone!). They are give the decision to the investor about whether the current time is good for them in terms of tax implications, they can choose to delay their sale or take the opportunity. The disadvantage is that they are often less dependable than dividends, which is often paid annually. Also if the company misjudges the share price they may end up paying a price which is too high and end up losing capital.
As an investor, you will not get a decision in what the firm chooses to do with the profit they earn (other than selling your shares!). However, knowing the impact the decision could make, may help you understand the motive behind it.
Good luck with your investments!
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