For many investors, it’s easy to ignore companies that don’t pay dividends.

But sometimes it pays to dig a little deeper into a stock — especially when you realize some of those companies are actually spending their billions on share buybacks instead to reward shareholders.

#-ad_banner-#​Why? Because these companies know that buybacks and dividends share one common trait — they’re both a transfer of wealth from the company to the shareholder.

But unlike dividends, buybacks aren’t taxable to companies or their shareholders. That’s why I like to think of them as a sort of “tax-free dividend.”

That’s just one of the reasons they’ve become more popular than dividends among shareholders and corporations alike…

As I’ve pointed out several times in StreetAuthority Daily, companies have been increasingly choosing stock repurchases in lieu of dividends to create value for their shareholders for the past two decades.

I explained more about how share repurchases transfer value in a previous article.

Just look at how S&P 500 companies have been spending their excess cash, especially since 1998…

It’s a trend that shows no sign of slowing down. In fact, over the past year alone, S&P 500 companies have distributed $330 billion in dividends… while they’ve shelled out $445 billion on share buybacks.

Put simply, this is a recipe for huge gains if you know what to look for. I explained more about how share repurchases transfer value in the article I mentioned earlier, but essentially if you’re invested in a company that buys back half of its outstanding shares, the shares you own can become twice as valuable — without the company even having to grow its profits by a dime.

As you might imagine, shareholders love the added value that buybacks give. The more value added to shares, the higher a stock’s price can go.

That’s why companies that buy back stock have nearly doubled the market’s performance since 2008. To see what I mean, just look at the Powershares Buyback Achievers ETF (NYSE: PKW) — which holds all of the top buyback companies in the U.S.

The top buyback companies have outperformed the market by 58 percentage points over the past five years. And looking at some of the companies the fund holds shows why…

Take Home Depot for instance. In the past year alone, it’s spent over $7 billion to repurchase shares. And over the past 5 years the company has soared 378% thanks in large part to the massive buybacks it’s paid to shareholders.

But I’ve found a company that’s been even more generous…

I originally recommended it to my Total Yield premium subscribers back in June. Put simply, it’s one of the most zealous advocates of stock buybacks I’ve ever seen.

AutoZone, Inc. (NYSE: AZO) is one of the nation’s largest specialty retailers of parts and supplies for car maintenance and repair.

With its two private label brands — Duralast and Valuecraft — accounting for more than half of its sales, the company wields considerable bargaining power over its vendors — which helps keep costs down.

As a result, Autozone is able to turn every dollar of sales into more than a dime of free cash flow.

And after keeping what it needs, the rest is used to diligently repurchase shares– over the past year alone the company has bought back 3.2 million shares.

The company first made a commitment to start investing in share repurchases back in 1998.

And to say it’s upheld that commitment would be a supreme understatement.

The firm posts a running tally of its buyback expenditures and share totals with each quarterly report — which says a lot about its mindset. In 1998, it had 169.1 million shares outstanding. Since then, it has systematically retired 136.5 million shares, leaving just 32.6 million shares outstanding.

Companies that have been truly dedicated to boosting their share value may have reduced their outstanding shares by 10% to 20% over the past decade… but AutoZone has shrunk its share count by an incredible 80%.

So for every 5 shares that had a claim on the company’s assets and profits back then, there is now just 1 remaining.

That means that if you had bought a share in AutoZone a decade ago, the value of that one share today would be worth at least five times more… And that assumes the company didn’t grow its profits.

But the company certainly did. AutoZone has nearly doubled its annual profits over the past decade — from $566 million to more than $1 billion.

All told with buybacks and profit growth, you’ve got fewer people splitting nearly 5 times the share of profits. No wonder earnings per share have soared from $6.66 in 2004 to $30.27 today…

You can see how the skyrocketing value added has done wonders for its stock price over the past decade too…

As I noted earlier — many investors would overlook this impressive company simply due to its 0% dividend yield…

But its strong dedication to share repurchases actually gives AutoZone much more value than dividends provide alone.

To measure this seemingly “hidden” value, I’ve found a new way to look at stocks beyond just dividend yield. Because it looks at dividends, buybacks and one other vital “debt paydown” metric, I call this a Total Yield strategy.

Factoring in all its wealth-transfer methods, AutoZone carries a hefty Total Yield of 6.7%.

And the company has more than $300 million remaining on the current share repurchase authorization — so more buybacks are coming, which could further increase its Total Yield — and its stock price gains.

But AutoZone is just one of the many companies I’ve found in using this Total Yield strategy.

In my latest research video, I talk about a little-known New Jersey company that has bought back several million of its own shares — helping its share price soar 1,260% in the past five years, with more room to run. Another military-defense company I’ll show you — I call it the “buyback king” — has bought back nearly 10% of its outstanding shares in just the past year and could lead investors to similar results.

And last year, 24 of the top 25 Total Yield stocks more than doubled the S&P 500’s return. To learn more about my strategy — and get the names and ticker symbols of some of my other favorite Total Yield stocks — I invite you to check out this free presentation.