Dividends are great. They're a very visible, verifiable way for companies to share their profits with shareholders. And at the end of the day isn't getting a slice of the profits what being a shareholder is all about?

But many companies are reluctant to get too aggressive about raising dividends too quickly. Dividend aristocrats like Clorox (NYSE: CLX) and Coca-Cola pride themselves on their long, unbroken streak of dividend increases, and if they were to suddenly bump the payout significantly, it could make it more difficult for them to continue their streaks.

Even companies that don't have the aristocrat title recognize that many dividend investors like to have a dependable payout level and get pretty upset if the company has to cut the payout down the road. So it behooves these companies to keep their payouts at very maintainable levels.

As a result, many companies look for other ways to return additional capital to their shareholders. And sometimes, those ways can slip the capital past dividend-investors' noses without them even noticing it.

Yes, I'm talking about buybacks
I'll say right up front that in general I'm not nearly as fond of buybacks as I am of dividends. The primary reason is that companies just don't seem to be as disciplined about buybacks as they should be.

In an ideal world, all companies with extra cash would be ready and willing to buy back their own shares. However, in that utopia they'd only ever pull the trigger when their stocks were actually at an attractive buy point. In practice, it seems like a lot of companies like throwing extra cash at shares no matter what the price, and sometimes the timing of the buybacks doesn't make a whole lot of sense.

Take Comcast (Nasdaq: CMCSA) for instance. Back in 2007 when the company's stock was trading at an average price-to-earnings ratio in the 30s, it spent more than $3 billion on share buybacks. Over the past 12 months, with the stock trading at multiples in the mid-teens, the company spent just $1.3 billion on buybacks.

Perhaps management has a view on the value of the company that I don't, but it sure looks like it was buying a lot of stock when the price was high and buying a lot less when the price was much lower.

Big money coming your way
Of course there are definite advantages to share buybacks over dividends though. Chief among them is the fact that investors don't have to worry about dividend taxes. And when buybacks are conducted when a stock is undervalued, the value to shareholders can be significant.

Adding together the impact of dividends and share buybacks, we can uncover companies that are far more generous with shareholders than their dividend yield alone reveals.

Company

Dividend Yield

Combined Yield

Combined Yield (1 year ago)

Combined Yield (2 years ago)

United Technologies (NYSE: UTX)

2.4%

4.4%

4.7%

5.2%

ExxonMobil (NYSE: XOM)

2.9%

5.8%

12.2%

13%

Procter & Gamble (NYSE: PG)

3.2%

6.3%

6.3%

7.5%

Baxter International (NYSE: BAX)

2.4%

6.2%

6.7%

7.2%

Lockheed Martin (NYSE: LMT)

4.2%

11.5%

10.2%

11.7%

Source: Capital IQ, a Standard & Poor's company, and author's calculations. Combined yield = Total cash used on dividends and share buybacks divided by total market cap over the last 12 months.

To be sure, an attractive combined yield doesn't necessarily mean that a particular stock is attractively valued. For instance, back in late August I argued the Procter & Gamble's isn't an overly attractive buy right now. Share buybacks also have much more "here today, gone tomorrow" potential than dividends, so there's no assurance that these yield levels will hold. For confirmation of that, just look at how much Exxon's distributions fell over the past couple years.

That said, looking at the numbers this way can give investors a different perspective on the generosity of many cash-rich companies.

Do you own a company that's particularly generous with its shareholders? Head down to the comments section and let us know why it's a must-own.

Interested in dividend stocks? Click here to check out a free Motley Fool report, "13 High-Yielding Stocks to Buy Today." 

Coca-Cola is a Motley Fool Inside Value pick. Clorox, Coca-Cola, and Procter & Gamble are Motley Fool Income Investor recommendations. The Fool owns shares of and has written covered calls on Procter & Gamble. The Fool owns shares of Coca-Cola and ExxonMobil. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor Matt Koppenheffer owns shares of Coca-Cola, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy assures you no Wookies were harmed in the making of this article.