Although the 1990s bull market oriented an entire generation of investors toward price appreciation, a shareholder’s primary objective should still be to get paid. In the past, dividends were a far more significant component of total return than they are today. In a 2003 editorial in the Financial Analysts Journal, famed investor Robert Arnott calculated that dividends and growth in dividends accounted for 73.4 percent of the market’s total return over the 200-year period ending in 2002. But these days, the overall market’s yield is a little more than one-third of its historical average.

Dividends may be in decline, but companies actually have two ways of compensating shareholders. In addition to dividends, companies can also undertake buyback programs to repurchase shares of their stock on the open market. And buybacks are in vogue with cash-flush corporations that want to compensate shareholders without necessarily committing to paying a dividend. Last year, S&P 500 companies spent roughly $437 billion on share repurchases, which was a 46 percent jump from the prior year.

Buybacks compensate shareholders indirectly by reducing a stock’s share count, which boosts earnings per share. Fortunately, there’s nothing to preclude a company from both paying a dividend and buying back shares of its stock, as long as it generates sufficient cash flow to perform these two actions while continuing to invest in the growth of its business.

Unlike dividends, however, buyback programs can be initiated for reasons that don’t necessarily coincide with increasing shareholder value. For example, buybacks can be used to mask a company’s weakening fundamentals by bolstering earnings per share. Like many retail investors, companies also have a poor record of purchasing shares when they’re trading at lows. Indeed, buybacks hit a record high in late 2007 near the market’s peak just prior to the Great Recession.

One way to discern whether a company is undertaking a buyback program for public relations purposes is to examine how its own insiders are behaving. Since corporate insiders receive a substantial amount of their total compensation from stock options and grants, it’s a meaningful sign when they opt to actually buy and hold shares of their company’s stock.

To determine which companies have their shareholders’ interests at heart, we screened US equities for the following criteria: dividend yields in excess of 3 percent; buy- back programs whose total value of repurchases last year totaled at least 5 percent of the stock’s market capitalization; significant repurchases authorized for the present period; and an increase in insider holdings of at least 10 percent over the trailing six-month period.

The two names that fulfilled these criteria are Lorillard (NYSE: LO) and Bank of Hawaii (NYSE: BOH).

Cigarette manufacturer Lorillard’s flagship Newport brand of menthol cigarettes holds a 36.2 percent domestic market share in the menthol category, and an 11.9 percent share of the overall US cigarette market. The company is highly dependent on its Newport brand, which accounts for roughly 94 percent of revenue. That could make it particularly vulnerable to any changes in the regulatory environment.

Additionally, cigarette volumes are declining in the US, and the company can’t take advantage of overseas growth because it sold the international rights to its brands back in 1977. For now, however, the stock boasts an attractive 4.8 percent yield, with a payout ratio of 65.1 percent. The company completed a $1.4 billion buyback program last year in which it purchased its shares at an average price of $93.05, and is now in the midst of a new $750 million buyback program.

The Bank of Hawaii’s conservative lending practices enabled it to emerge from the Great Recession relatively unscathed. It is the second largest bank in Hawaii, with a substantial 30.6 percent market share. At the end of 2011, its percentage of nonperforming loans was just 0.73 percent, while net charge-offs during the fourth quarter were 0.39 percent annualized. The bank’s 15.2 percent return on equity compares favorably with its mainland peers.

The Bank of Hawaii’s stock yields 3.9 percent, with a payout ratio of 53.1 percent. During the fourth quarter, the bank repurchased $29.1 million worth of its shares at an average price of $41.44, and had $74 million remaining in its repurchase authorization at the end of 2011.