Boon refers to a benefit or improvement for investors, such as increased dividends, a stock market rally or stock buybacks.

This term is often seen in the investment press in such headlines as "This Boom is a Boon to Investors." Essentially, any event or period in which investors experience robust returns could be considered to be a boon.


News of possible merger or a corporation's stock buyback plans are examples of why investors might experience a boon on their investment. Often the time to profit from the boon is short-lived as other circumstances eliminate the temporary price increase.

Mergers and Boons

In June 2015, Dish Network Corporation and T-Mobile US announced a possible merger, and the prices of both stocks increased. This potential merger also resulted in an increase in prices of stocks for cell tower stocks. Cell tower companies are responsible for transmitting cellular data. While the initial boon for cell tower stockholders, Barron's predicted more growth with the completion of the deal. By mid-July, it looked as if the Federal Communications Commission (FCC) was unlikely to approve part of the merger and stock prices dropped, ending the temporary boon.

Stock Buyback and Boons

Companies often invest in themselves by purchasing some of their outstanding shares of stock. A stock buyback benefits the corporation by reducing the chances of a hostile takeover by some of its shareholders who attempt to gain a controlling majority by buying available stock. Some companies offer a premium on top of the current market price of their stock to encourage investors to sell their stock back to the company, while others simply buy shares on the open market. The premium is one form of boon benefiting the investor, but those that keep their stock also benefit as reducing the number of shares increases the value of each one that remains in the investment portfolio.

The boon of a stock buyback can also end quickly. LPL Financial Holdings began a stock buyback totaling $250 million in the last quarter of 2015. While it offered a premium to a single large company that held some of its stock, the initial price on September 23 of the year was $40.20 and the company paid an average of $43.50 for 5.6 million shares. When the company reported fourth-quarter and year-end losses, its stocks collapsed to $16.50 per share, slightly more than half of its initial offering of $30 per share.

  1. Buyback Ratio

    Buyback ratio is amount of cash paid by a company for buying ...
  2. Expanded Share Buyback

    An expanded share buyback is an increase in a company’s existing ...
  3. S&P 500 Buyback Index

    S&P 500 Buyback Index is an index designed to track the performance ...
  4. Mergers and Acquisitions - M&A

    A merger is a combination of two companies to form a new company, ...
  5. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies ...
  6. Merger Securities

    A non-cash asset paid to the shareholders of a corporation that ...
Related Articles
  1. Investing

    6 Bad Stock Buyback Scenarios

    Buying back shares can be a sensible way for companies to use extra cash. But in many cases, it's just a ploy to boost earnings.
  2. Investing

    A Breakdown Of Stock Buybacks

    Find out what these company programs achieve and what it means for stockholders.
  3. Investing

    How MasterCard Pulled Off a Buyback

    Stock buyback refers to publicly traded companies buying back their shares from shareholders. Why would they do that?
  4. Investing

    10 Stocks Poised To Outperform On Record Buybacks

    Buybacks are at a 10-year high and may fuel more stock market gains
  5. Investing

    Are Share Buybacks Propping Up the Market? (AAPL, MSFT)

    Companies are repurchasing their own shares at a rate not seen in nearly a decade, prompting observers to fret that demand for equities is not as strong as the past six weeks' rally would suggest.
  6. Investing

    Dividend versus buyback: Which is better?

    Companies reward their shareholders by paying dividends or buying back shares. Learn which action is better for investors.
  7. Investing

    How Buybacks Warp The Price-To-Book Ratio

    Relying on price-to-book can get ugly if a company has repurchased stock. Learn why.
  8. Investing

    The impact of share repurchases

    Share repurchases can have a significant positive impact on an investor’s portfolio and are a great way to build investor wealth over time.
  9. Investing

    The Share Buyback Report: The Telecom Sector (T, VZ)

    Examine telecommunications sector share repurchase data to identify which companies and catalysts drove buyback trends between 2006 and 2015.
  10. Investing

    Buyback Fever: What's Driving the Buying Spree

    American companies are stepping up buybacks in anticipation of Trump's planned repatriation tax holiday.
  1. Why Would A Company Repurchase Its Own Shares?

    Learn about share buybacks and the reasons a company might choose to repurchase its own stock, including ownership consolidation ... Read Answer >>
  2. What companies will typically exercise buybacks, and why do they do it?

    Learn about what types of businesses typically execute stock buybacks and what this maneuver can indicated about a business' ... Read Answer >>
  3. How does a merger affect the shareholders?

    Explore the impact of a merger and understand how the process affects shareholders of the newly merged firm in terms of stock ... Read Answer >>
  4. How does it affect a company's credit rating to buy back shares?

    Learn how buying back shares can negatively affect a company's credit rating if the company uses debt to finance a share ... Read Answer >>
  5. What happens to the shares of a company that has been the object of a hostile takeover?

    Learn about the effect on the share price of companies that are targets of hostile takeovers, which are tactics used by famed ... Read Answer >>
  6. What Is Treasury Stock?

    Find out about shares called treasury stocks that were once part of shares outstanding for a company, but have since been ... Read Answer >>
Hot Definitions
  1. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  2. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
  3. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
  4. Return on Investment (ROI)

    Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency ...
  5. Interest Coverage Ratio

    The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest ...
  6. Cash Conversion Cycle - CCC

    Cash conversion cycle (CCC) is a metric that expresses the length of time, in days, that it takes for a company to convert ...
Trading Center