Seeing dividends as a tool of value creation for shareholders is a common pitfall observed with politicians, journalists and even investment professionals. Dividend policy in itself will never create or destroy value for shareholders. Anyone who already detained a stock paying a dividend saw the value of the stock tumbling by the amount of the dividend paid. Dividends are only a way of modifying the nature of the wealth already created. Buybacks are nothing else than dividends immediately re-invested in the shares of the company.
In fact dividends change the capital structure of the company by increasing its leverage. Then buybacks does not create value, they only increase the potential return from the company but also its risk.
Finally, the real question for a company regarding its earnings is : does it exist a project with a return on capital at least equal to my cost of capital ? If yes use the cash, otherwise give it back to shareholders. The cost of capital takes into account the risk of the business. It’s almost certain that you will find in your investment universe an external return larger than the internal return offered by the company. But at which price, id est at which level of risk ?