On paper, share repurchases are worth more to investors than dividends. In practice, I believe investors are better off with dividends. Whether that's still the case next year depends on Congress.

Dividends and share repurchases are both used to periodically transfer company profits to shareholders. With dividends, the transfer is made in the form of a cash payment. Repurchases are used to retire outstanding shares, which increases earnings per share (because they're calculated using fewer shares).

In theory, share repurchases should make remaining shares more valuable by the same amount investors would have received from dividends. However, dividends are taxed and repurchases aren't, which shifts the math in favor of repurchases.

In practice, the financial crisis of 2008 and 2009 showed that companies abandon repurchase programs at the first sign of trouble. Spending on repurchases for S&P 500 companies plunged more than 85% from peak to trough. Dividend payments are stickier because companies announce rates ahead of time and investors usually judge cuts harshly. Dividend spending fell 22% from peak to trough -- and much less if we exclude the cuts of a handful of giant banks. That means that shareholders who reinvest their payments were mostly able to "buy low," as the mantra goes. Those who depend on companies to buy low for them through repurchases were largely out of luck.

Here's how things might shift soon. In 2003, the Bush administration championed a series of reductions in stated tax rates. (I call them that, rather than tax cuts, because the U.S. has overspent its tax revenues each year since then, and the difference has been borrowed at interest to be repaid by future taxpayers. Real tax cuts require corresponding spending cuts.) The maximum tax rate on dividends dropped to 15%, but the reduction expires at the end of 2010. Without action from Congress, dividends next year will be taxed at the same rate as ordinary income. For investors in high tax brackets, marginal rates will go as high as 39.6% -- and that's not counting the corporate tax collected after company profits are reported but before they're sent out as dividends.

With that in mind, here's a sampling of companies with no dividends but a history of aggressive share repurchases. Each has retired at least 5% of its stock over the past year, net of new share issuances.

AutoZone

Past-year spending on share repurchases (net of issuance): $1.1 billion
Percent of current stock market value: 12%

AutoZone is the largest retailer of car parts and accessories to do-it-yourself customers. The industry is flourishing amid a dearth of new car sales, as drivers use replacement parts and tune-ups to get a few more years out of existing vehicles. Sales for AutoZone rose nearly 10% in the company's most recent quarter. Earnings per share, meanwhile, jumped 32%. Part of the difference between those two rates is owed to efficiency efforts, but most of it came from share repurchases. The company is a voracious buyer of its stock, having spent more than $8 billion on shares since 1998. The market value of remaining shares is a little over $9 billion. The company's growth streak is forecast by analysts to continue through its next fiscal year, but the stock sells for a modest 13 times forecast earnings for the current fiscal year, which ends August.

Wellpoint

Past-year spending on share repurchases (net of issuance): $3.2 billion
Percent of current stock market value: 14%

Wellpoint is the largest U.S. health insurer by membership, with an exclusive license to Blue Cross and Blue Shield business in 14 states. Its revenues are expected to dip slightly this year because high levels of joblessness have reduced membership, but benefit expenses are down, too, and earnings per share are expected to rise modestly for the year. Wellpoint generates yearly free cash equal to about 12% of its stock market value and management has lately spent that much and more on stock. It might be getting a bargain. Shares sell for just nine times earnings.

Netflix

Past-year spending on share repurchases (net of issuance): $358 million
Percent of current stock market value: 6%

Netflix is benefitting from a confluence of factors. Strapped consumers are foregoing expensive entertainment in favor of movies at home. The financial woes of Blockbuster have hobbled that competitor. High-bandwidth Internet connections have become common and Netflix has made deals to stream its service through entertainment devices, including videogame consoles, so movie-streaming is no longer something that must be done on a computer. Sales for the company are expected to rise 29% this year and earnings per share, 34%. The stock price, at 45 times this year's earnings forecast, is terrifying to my tastes but is apparently attractive to management. According to Morningstar Equity Research, Netflix has spent $732 million on shares since 2006, despite generating just $220 million in free cash flow. In November, the company issued its first long-term debt and used part of the proceeds to buy stock.