Dividends are immediately taxable.

Stock buybacks are designed to let the shareholder see the same upside, but decide when to take the taxable event. Long term gains are also preferable to non-qualified dividends.

Even worse for non-American stockholders of American companies - the IRS charges a 30% foreign withholding tax on dividends. If you ban stock buybacks in favour of dividends, it’s a big tax increase on foreigners, so US stocks lose a whole pile of value for American stockholders when foreigners dump American equities until the ROI equalizes. (Roughly 20% of US equities are foreign-owned.)