Yes. There is a cost.
If a trader sells shares short and those shares pay a dividend, the trader is responsible for paying the dividend amount to the broker. The money the short seller pays is not the actual dividend but is a payment in lieu of dividend.
http://wiki.fool.com/Substitute_Payment_in_Lieu_of_Dividends
So an increase in dividend would hurt shorts. I have no problem with the share buyback and encourage it but if we're going to drift lower on low volume like today then the shorts are back at it and they need their costs to increase. A lower float only makes things easier for them with volatile movements until positive news is reached. We already have a dividend but like any tax, by increasing the dividend, we can reduce the shorts activity and encourage long term ownership.
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