When a company has a lot of cash from the business but cannot...

When a company has a lot of cash from the business but cannot find anything good to invest in, they can either give it back to the shareholders via dividends or buy back the issued shares. With D2O, I think their earnings depend quite a bit on the weather. If it is dry, the demand for water will increase and so will the price and their earnings. In wet weather, the reverse is true.

If they pay higher dividends now because they are making a killing in the drought, they may not be able to sustain the increased dividends in the longer term. They can pay a special dividend but investors may not remember the one-off payment. To buy back its own shares, the effect is that the earnings will be shared by less shares and the value of the shares will increase. This will probably benefit the shareholders the most.

When the wet weather comes, they can buy more water assets at a cheaper price and wait for the next drought.

As the shares are so illiquid (nobody wants to sell), the daily buy back is so small and it will take a long time for them to buy back the intended 7M or so shares. So buying a truck load of the shares now before people start to get interested and wait for the buy back to complete has a pretty good chance of making good capital gains. The long wait is OK as the dividends are so high anyway. You just can't lose on this one (my opinion only - I have been known to lose my pants a few times).