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Today is last chance to get in on Apple's spring dividend

post #1 of 23
Thread Starter 
Apple recently announced plans to increase its dividend payment by 15 percent to "shareholders of record" next Monday, but to qualify, new investors have to buy the company's stock by the market's close today.

Apple


Apple automatically pays shareholders of record a dividend about a month and a half after the end of each fiscal quarter.

That date falls on Monday May 13th for the current spring quarter, but the last opportunity for shareholders to qualify for the dividend ends today, Wednesday May 8; shares changing hands two or fewer business days before the dividend record date do not transfer dividend rights.

The reason for the delay, as noted by Philip Elmer-Dewitt, is an accounting principle know as the "ex-dividend" or reinvestment date, which determines the party owed the dividend when shares change ownership immediately before the dividend is paid. When a share is sold, the transaction does not "settle" for three days.

The stock market (in Apple's case, NASDAQ) automatically adjusts the value of the company's stock by the value of the dividend, as the dividend reduces the value of the company because it is paid from the company's cash holdings. This is offset by the fact that shareholders are getting the dividend, and are promised an ongoing dividend in the future in addition to the ongoing appreciation of the stock, further enhanced by the buyback program, which increases the scarcity (and therefore value) of Apple's stock by taking it off the market.

Over the past year, Apple has been paying out $2.5 billion in dividends every quarter to the holders of its just under one billion outstanding shares, a total of about $10 billion in dividends paired with an equally sized stock buyback program.

This year, the company announced a "significant increase" to its capital return program, raising its quarterly dividend from $2.65 per share to $3.05 and adding another $50 billion to its stock buyback program.

Shareholders of record will be paid the dividend three days after the record date (May 16 this quarter), essentially meaning that buyers would need to buy shares today in order to get the dividend next week.

Buyers are not likely to rush to avail themselves of the dividend payment however, as the real value to Apple's shareholders comes from long term investment; in the short term, the dividend is essentially canceled out by the market's reevaluation of the share price.
post #2 of 23
Love to pick up some Money from Apple :-)
post #3 of 23
Cha-ding!
post #4 of 23

deleted


Edited by MacRulez - 7/24/13 at 10:48am
post #5 of 23
Does this mean we'll see the stock jump and then drop every 3 months as short-term investors pump and dump?

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post #6 of 23
Quote:
Originally Posted by MacRulez View Post

So we can pay 100% of the stock price to get 15% back as a dividend - excellent tip, DED, thanks!

 

The dividend is not 15%. Are you for real? lol.gif

 

Have you ever owned a single stock before?

 

Apple raised the previous dividend amount by 15%, bringing it to $3.05 per share.

 

And the point of this article was obviously to point out that today is the last day to buy into AAPL, if somebody wishes to receive a dividend for this quarter.

post #7 of 23
not even sure what your getting at macrulez.

the div is around 3% now that it has been increased by 15%
you get 3% back over the course of a yr, about .75% each quarter.

so if you have $100K in Apple stock, you get a check for $750 every 3 months.
post #8 of 23

deleted


Edited by MacRulez - 7/24/13 at 10:48am
post #9 of 23
This whole article is silly because you exactly don't want to buy it today. The day after the dividend is issued, tomorrow, the stock price is automatically lowered by the amount of the dividend. So you're not missing anything.

In fact, if you bought it today, you'd pay $3.05 more per share, to get that $3.05 back a month later as highly taxed short-term capital gains. So unless you're a liberal who thinks shareholders should pay taxes for no reason, hold on to your money.
post #10 of 23
Quote:
Originally Posted by konqerror View Post

This whole article is silly because you exactly don't want to buy it today. The day after the dividend is issued, tomorrow, the stock price is automatically lowered by the amount of the dividend. So you're not missing anything.

In fact, if you bought it today, you'd pay $3.05 more per share, to get that $3.05 back a month later as highly taxed short-term capital gains. So unless you're a liberal who thinks shareholders should pay taxes for no reason, hold on to your money.

 

The stock does not automatically drop $3.05.  The last 3 dividends the stock went up, went down, and stayed flat. 

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post #11 of 23
Quote:
Originally Posted by sog35 View Post

 

The stock does not automatically drop $3.05.  The last 3 dividends the stock went up, went down, and stayed flat. 

 

Incorrect. The historical stock prices are adjusted too, so what you are seeing has the adjustment taken out. The opening price and any outstanding orders are automatically adjusted. Of course normal market movements occur at the same time and dividends are always a small fraction of the normal stock price.

 

This stuff is all stock market 101. No wonder individual investors lose their shirt in stocks, then try to blame others.

post #12 of 23
Quote:
Originally Posted by konqerror View Post

This whole article is silly because you exactly don't want to buy it today. The day after the dividend is issued, tomorrow, the stock price is automatically lowered by the amount of the dividend. So you're not missing anything.

In fact, if you bought it today, you'd pay $3.05 more per share, to get that $3.05 back a month later as highly taxed short-term capital gains. So unless you're a liberal who thinks shareholders should pay taxes for no reason, hold on to your money.

Obviously it's a cost "neutral" event.  There is no compelling reason not to collect the dividend so saying it is silly to buy today is...equally silly.  Apple pays out in a week unlike most companies, but either way if you are suggesting people avoid dividend paying stocks you are uninformed.  Dividend paying stocks have significantly out performed the broader market over the last fifty years.

post #13 of 23
So if I sold some of my AAPL last week, did I miss out on the dividend?
Seems just that I should get it, since I held the stock for the relevant quarter.
post #14 of 23
Quote:
Originally Posted by sog35 View Post

Quote:
Originally Posted by konqerror View Post

This whole article is silly because you exactly don't want to buy it today. The day after the dividend is issued, tomorrow, the stock price is automatically lowered by the amount of the dividend. So you're not missing anything.


In fact, if you bought it today, you'd pay $3.05 more per share, to get that $3.05 back a month later as highly taxed short-term capital gains. So unless you're a liberal who thinks shareholders should pay taxes for no reason, hold on to your money.

The stock does not automatically drop $3.05.  The last 3 dividends the stock went up, went down, and stayed flat. 

Of course it does not 'automatically' do so. There are always lots of other confounding information and events that make it difficult to isolate the specific impact of dividend payouts.

What he means, in the context of this article, is "all else equal." He is exactly right.
post #15 of 23
Quote:
Originally Posted by astrod View Post

So if I sold some of my AAPL last week, did I miss out on the dividend?
Seems just that I should get it, since I held the stock for the relevant quarter.

You only get the dividend if you are a shareholder of record on the dividend record date. Owning it any other time is not relevant for the dividend.

post #16 of 23

deleted


Edited by MacRulez - 7/24/13 at 10:48am
post #17 of 23

There are many good reasons,  I'm still holding onto my shares.

post #18 of 23
Quote:
Originally Posted by konqerror View Post

 

Incorrect. The historical stock prices are adjusted too, so what you are seeing has the adjustment taken out. The opening price and any outstanding orders are automatically adjusted. Of course normal market movements occur at the same time and dividends are always a small fraction of the normal stock price.

 

This stuff is all stock market 101. No wonder individual investors lose their shirt in stocks, then try to blame others.

 

Get off you high horse.  Just look at the stock price of Apple at the close right after the ex-div date.  Like I said one day it was up, one day it was down, and one day flat.  The Stock opening at $3 means nothing. 

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post #19 of 23
Quote:
Originally Posted by sog35 View Post

Get off you high horse.  Just look at the stock price of Apple at the close right after the ex-div date.  Like I said one day it was up, one day it was down, and one day flat.  The Stock opening at $3 means nothing. 

All else being equal, the stock would open $3.05 less tomorrow than it closed today. But the stock market is anything but equal. Something big could happen in another country overnight that could cause a big move in the market as a whole or in Apple individually.
post #20 of 23
Quote:
Originally Posted by sog35 View Post

Quote:
Originally Posted by konqerror View Post

 

Incorrect. The historical stock prices are adjusted too, so what you are seeing has the adjustment taken out. The opening price and any outstanding orders are automatically adjusted. Of course normal market movements occur at the same time and dividends are always a small fraction of the normal stock price.

 

This stuff is all stock market 101. No wonder individual investors lose their shirt in stocks, then try to blame others.

 

Get off you high horse.  Just look at the stock price of Apple at the close right after the ex-div date.  Like I said one day it was up, one day it was down, and one day flat.  The Stock opening at $3 means nothing. 

You don't have to get in a huff just because you misunderstood what he was trying to say.....

post #21 of 23
Quote:
Originally Posted by tkell31 View Post

Obviously it's a cost "neutral" event.  There is no compelling reason not to collect the dividend so saying it is silly to buy today is...equally silly. 

 

I told you why. If you bought today, the dividend will be taxed as an ordinary dividend, e.g. short term capital gain. There's no reason to pay that just to hold the stock for one more day.

post #22 of 23
Quote:
Originally Posted by konqerror View Post

I told you why. If you bought today, the dividend will be taxed as an ordinary dividend, e.g. short term capital gain. There's no reason to pay that just to hold the stock for one more day.

Actually, in the US the dividend will be taxed as a "qualified dividend" and be taxed at 0%, 15%, or 20% rates, plus the 3.8% Medicare tax if it applies to you.
post #23 of 23
Quote:
Originally Posted by msuberly View Post


Actually, in the US the dividend will be taxed as a "qualified dividend" and be taxed at 0%, 15%, or 20% rates, plus the 3.8% Medicare tax if it applies to you.

 

Also incorrect. A qualified dividend requires you to hold the stock for 60 days in a window around the ex-dividend date. If you do not meet this holding requirement, it is taxed as an "ordinary dividend". It all depends on how long you have held the stock.

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