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Apple to give shareholders another $2.5 billion on Valentine's Day

post #1 of 22
Thread Starter 
Apple will pay shareholders its third dividend tomorrow, distributing roughly $2.5 billion at $2.65 per share across the company's 939 million outstanding shares.


Cash


Apple added $38 billion in cash in fiscal 2011, but $16 billion in just the last quarter. Chart by Asymco.


Flush with billions in cash it simply can't spend fast enough, Apple first announced plans for its dividend program in March, alongside a $10 billion share buyback program. Each quarter, the company said it would pay shareholders a $2.65 per share dividend. Shareholders of record on February 11 will receive dividend payments tomorrow, February 15th.

Apple's chief executive Tim Cook noted that the company has "used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You?ll see more of all of these in the future.

?Even with these investments," he added, "we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program."

Can't spend fast enough to make a dent



Over the next three years, Apple has stated that its buyback and dividend plans will distribute $45 billion from its cash pile, with quarterly dividends handing out $2.5 billion per quarter.

Apple is earning new cash faster than it is paying out in dividends however, so its $2.5 billion in quarterly dividend payments has not reduced Apple's cash hoard over the past three quarters.

In the company's December quarter, Apple announced a sequential increase of an additional $16 billion in cash, leaving it with $137.1 billion in cash at the end of the year.

Apple will continue paying new quarterly dividends about a month and a half after the end of each subsequent quarter. A dividend equivalent will also be paid to holders of Apple's restricted shares, although Cook has declined to collect dividend payments for the 1.125 million shares of restricted stock he has been granted, which would otherwise be worth over $75 million.

The company's current dividend payment rate is quite modest when compared to its current and future cash position. At the same time, Apple's $2.5 billion in quarterly dividend payments makes it one of the highest dividend payers in the U.S.
post #2 of 22

Does the money just show up in somebody's trading account?

post #3 of 22
Thank You! That would be second gift from Apple (yes, this was scheduled) The first gift I liked was what Apple gave to GreenLight - A smack right across their face! Looks like Steve is back!
post #4 of 22
Quote:
Originally Posted by Apple ][ View Post

Does the money just show up in somebody's trading account?

 

IF ONLY!

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post #5 of 22

I don't know if I'd call this a gift. I admit to being ignorant about stock dividends, but I've been skeptical to the AAPL dividend since the beginning, and I've stated that before here on this forum a few times.

 

Apple has plenty of cash sitting around of course, but this is still costing them $2.5 Billion, and for what really? I still wonder why anybody would be happy about getting the enormous amount of $2.65 per share, when the stock is far down from where it should be, IMO.

 

I guess that I don't have the same long term perspective that some other people do, but it'll be pretty funny if AAPL drops $10-15 tomorrow. So with the dividend, instead of losing $15 per share, somebody will only lose $12.35 per share now? lol.gif

 

I must not understand this whole dividend business, because I'd rather that Apple keeps it's 2.5 Billion and not pay me $2.65 per share.

post #6 of 22
Funny how many times the words "Apple can't" is used in the article. (you got that one right)
That about sums them up these days.
post #7 of 22
Quote:
Originally Posted by "Apple 
[" url="/t/155971/apple-to-give-shareholders-another-2-5-billion-on-valentines-day#post_2277576"]Does the money just show up in somebody's trading account?

Brokerage accounts, in my experience, default to shares being held in street name (brokerage firm is the custodian of your shares) and dividends being paid into the account. Most likely, unless you went out of your way to specify otherwise, that is how your account is set up. So....yes.
post #8 of 22

I'd rather they devote that 45 billion into lowering the cost of their products, personally. Even if you own a hundred shares, you're not exactly banking a large profit here, so it's a token gesture at best.

post #9 of 22
Quote:
Originally Posted by Cash907 View Post

I'd rather they devote that 45 billion into lowering the cost of their products, personally. Even if you own a hundred shares, you're not exactly banking a large profit here, so it's a token gesture at best.

It's a bit over a 2% yield - which is extraordinarily high for a growth stock.

But your post is just another example of how Apple can't win. If they don't give dividends, people whine about how they're holding onto the cash for no reason. If they give dividends, people complain that it's not enough to matter and they should do something else with the money.

I wish people would just stfu and let Apple run the company the way they want to. They've certainly done well enough for shareholders over the last decade without everyone second guessing their every move.
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post #10 of 22
Quote:
Originally Posted by "Apple 
[" url="/t/155971/apple-to-give-shareholders-another-2-5-billion-on-valentines-day#post_2277586"]
I must not understand this whole dividend business, because I'd rather that Apple keeps it's 2.5 Billion and not pay me $2.65 per share.

When you own stock, you own part of the company. If I owned a store, and the store made money, I'd expect to receive some of the profits. The dividend is your share of the profit. As a public company, Apple has a duty to its owners to ensure their money is used in the best way possible. If Apple does not have a need for investor's cash then it has a duty to return it.

The price of a stock reflects the potential of the stock to provide a return to the investor. This return is through both dividends and appreciation. The fact that Apple regularly issues a dividend is reflected in the price of the stock. A dividend is also how you get a return on a company that has become so large the growth has slowed. For example, the old AT&T and GM both issued generous dividends for many decades, they would be how retirees and widows lived.
post #11 of 22
Quote:
Originally Posted by "Apple 
[" url="/t/155971/apple-to-give-shareholders-another-2-5-billion-on-valentines-day#post_2277576"]Does the money just show up in somebody's trading account?

Yes.
post #12 of 22
Quote:
Originally Posted by "Apple 
[" url="/t/155971/apple-to-give-shareholders-another-2-5-billion-on-valentines-day#post_2277586"]
So with the dividend, instead of losing $15 per share, somebody will only lose $12.35 per share now? lol.gif

Barring any other effect, the consequence of the dividend will be an 'ex-dividend' decline of $2.65 per share from whatever else affects the share price. So it would decline to $17.65 (not $12.35) in your scenario.

However, that might have already happened on the date the quarterly dividend was formally declared (and thus became a legal liability of the firm).
post #13 of 22
Quote:
Originally Posted by Cash907 View Post

I'd rather they devote that 45 billion into lowering the cost of their products, personally. Even if you own a hundred shares, you're not exactly banking a large profit here, so it's a token gesture at best.

This makes absolutely no sense!  Shareholders own the company and, unless you want to overthrow our entire economic system, they should expect some gain from that.  What good would simply lowering prices do for shareholders?  Sure, it would be nice for customers, but, as a shareholder, why would I want to subsidize other people's purchases of Apple goods?

You might be surprised to know that many people own more than a hundred shares, but lets use that as an example anyway.  Suppose I own 100 shares of AAPL.  At the current dividend rate, I receive $265.00 per quarter.  Even if Apple lowered prices on everything across the board by $100, I would have to buy over 10 Apple products a year to cover that.  Not very likely even for an avid Apple fan.  This doesn't even take into account how much my AAPL shares would drop when Apple's margins take a huge hit after the price reductions.  

Please tell me why any shareholder would think your idea is a good one?

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post #14 of 22
Quote:
Originally Posted by AppleInsider View Post

Over the next three years, Apple has stated that its buyback and dividend plans will distribute $45 billion from its cash pile, with quarterly dividends handing out $2.5 billion per quarter.

[…]

The company's current dividend payment rate is quite modest when compared to its current and future cash position. At the same time, Apple's $2.5 billion in quarterly dividend payments makes it one of the highest dividend payers in the U.S.

An average of 15 billion per year is an extraordinary number. I know it's hard to direction compare but has any company ever committed as much to stock buyback (that wasn't for making a company private) and dividends?
Quote:
A dividend equivalent will also be paid to holders of Apple's restricted shares, although Cook has declined to collect dividend payments for the 1.125 million shares of restricted stock he has been granted, which would otherwise be worth over $75 million.

That $75 million figure lost me. 1.125 million shares is worth $525.39 million as of today and that would be a pay out of just under $3 million per quarter which is about 12 million per year. I personally feel that Cook should take the dividend. He's performed well for Apple. I hope the board has planned to compensate him in another manner that is equatable.

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post #15 of 22
Thanks, I will take the dividend and fully expect them to increase it further this March and in coming years. Of course I'm looking long term and use the dividend to buy additional shares.
post #16 of 22
Quote:
Originally Posted by Apple ][ View Post

I don't know if I'd call this a gift. I admit to being ignorant about stock dividends, but I've been skeptical to the AAPL dividend since the beginning, and I've stated that before here on this forum a few times.

 

Apple has plenty of cash sitting around of course, but this is still costing them $2.5 Billion, and for what really? I still wonder why anybody would be happy about getting the enormous amount of $2.65 per share, when the stock is far down from where it should be, IMO.

 

I guess that I don't have the same long term perspective that some other people do, but it'll be pretty funny if AAPL drops $10-15 tomorrow. So with the dividend, instead of losing $15 per share, somebody will only lose $12.35 per share now? lol.gif

 

I must not understand this whole dividend business, because I'd rather that Apple keeps it's 2.5 Billion and not pay me $2.65 per share.

 

 

You only lose/gain when you sell your stock so fluctuations mean nothing until you sell. 

 

Some will see this as great, other will see this as not enough, while other will point out how you can make more on your cash investing elsewhere. 

 

Bottom line: Apple won't win, which is why Steve never bothered. 

 

T


Edited by Richard Getz - 2/13/13 at 9:15pm
post #17 of 22
Quote:
Originally Posted by jragosta View Post


It's a bit over a 2% yield - which is extraordinarily high for a growth stock.

But your post is just another example of how Apple can't win. If they don't give dividends, people whine about how they're holding onto the cash for no reason. If they give dividends, people complain that it's not enough to matter and they should do something else with the money.

I wish people would just stfu and let Apple run the company the way they want to. They've certainly done well enough for shareholders over the last decade without everyone second guessing their every move.

 

Shareholders are the owners of the company.

 

Management must perform their fiduciary duty to be aligned with shareholders interest.

 

That is what a corporation does. If the owners wants it, management should listen.

 

Thing is, management is also part of the owner, hence, the conflict.

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post #18 of 22
I personally intend to reinvest my dividend and buy more stock. I do this will all my stocks that pay dividends.
post #19 of 22
Quote:
Originally Posted by Richard Getz View Post

 

 

You only lose/gain when you sell your stock so fluctuations mean nothing until you sell. 

 

Some will see this as great, other will see this as not enough, while other will point out how you can make more on your cash investing elsewhere. 

 

Bottom line: Apple won't win, which is why Steve never bothered. 

 

T


There are only so many things they can spend it on anyway.

post #20 of 22
Quote:
Originally Posted by SolipsismX View Post

An average of 15 billion per year is an extraordinary number. I know it's hard to direction compare but has any company ever committed as much to stock buyback (that wasn't for making a company private) and dividends?
That $75 million figure lost me. 1.125 million shares is worth $525.39 million as of today and that would be a pay out of just under $3 million per quarter which is about 12 million per year. I personally feel that Cook should take the dividend. He's performed well for Apple. I hope the board has planned to compensate him in another manner that is equatable.

If he is foregoing the dividend it is a safe bet that he is either being well compensated elsewhere or he is doing it on advice from his accountants (maybe tax reasons?) or attorneys. Either way, I would assume that the CEO of the worlds most valuable tech company is being well taken care of.
post #21 of 22
Problem is the small dividend is lost in the stock price almost on a daily basis
post #22 of 22
Quote:
Originally Posted by mvigod View Post

Problem is the small dividend is lost in the stock price almost on a daily basis

The "small dividend" is around 2% - which is actually fairly high for most stocks - except true income stocks.

Quote:
Originally Posted by konqerror View Post

When you own stock, you own part of the company. If I owned a store, and the store made money, I'd expect to receive some of the profits. The dividend is your share of the profit. As a public company, Apple has a duty to its owners to ensure their money is used in the best way possible. If Apple does not have a need for investor's cash then it has a duty to return it.

Please point out where the law says they have a duty to return it.

Apple has no such duty. If they feel that they might need the money some time int he future, then they should hold onto it.

In reality, paying a dividend doesn't really benefit shareholders significantly. When a dividend is paid, the share price typically falls by that amount. So there's really not all that much difference whether they distribute dividends or not. IOW, if you have enough shares, then there isn't really much difference between receiving a 2% dividend and selling 2% of your stock (except that dividends are typically taxed at a higher rate than capital gains).

Dividends are largely psychological for a company like Apple.
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