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Apple, Inc. to distribute another $2.77 billion in dividends to shareholders Thursday

post #1 of 24
Thread Starter 
Apple is paying its shareholders another quarterly dividend on Thursday, but spending about $110 million less because it has bought back and retired 36 million shares over the June quarter.


Source: Apple


There are now 908.44 million outstanding shares in the company, meaning Apple will be distributing a total of $2.77 billion. Shareholders "of record" by the ex-dividend date last week will be paid $3.05 per share.

Apple's stock buyback program spent $16 billion over the last quarter buying 36 million shares off the market at an average price of $444.44. As of the end of June, Apple still had $44 billion left to invest in itself under the current program over the next two and a half years.




Source: Ycharts.com


Flush with billions in cash it simply can't spend fast enough, Apple first announced plans for a dividend program a year ago last March, alongside a $10 billion share buyback program. It was the first time the company had paid a dividend in 17 years. Each quarter, the company initially stated it would pay its shareholders a $2.65 per share dividend.

In an earnings conference call earlier this year, the company's chief executive Tim Cook announced that, after paying out more than $10 billion over the previous year in dividends, the company would launch "an aggressive plan that more than doubles the size of the [existing] capital return program."

Cook said "the vast majority of our incremental cash return will be in the form of share repurchases," explaining that "as the Board and management team deliberated among the various alternatives to returning cash, we concluded that investing in Apple was the best. In addition to share repurchases, we are increasing our current dividend by 15% to further appeal to investors seeking yield."

He added, "while we continue to generate cash in excess of our needs to operate the business, invest in our future and maintain flexibility to take advantage of strategic opportunities, we remain firmly committed to our objective of delivering attractive returns to shareholders through both our business performance and the return of capital."

A report by the Dividend Daily stated that Apple's dividend program has attracted new retail investors, noting that "retailer investors are pouring money into tech giant Apple Inc. than ever before."

The report cited consumer-oriented brokerage firm TD Ameritrade as saying that "more of its clients own Apple shares now than at any other point," making Apple shares the second most widely held stock by its clients after General Electric in share count, and by far the most widely held in terms of dollar value.

Can't spend fast enough to make a dent



Over the next three years, Cook outlined that Apple's newly expanded buyback and dividend plans will distribute $100 billion from its cash pile, leveraging debt markets to borrow at very low interest against the company's vast holdings that are mostly held overseas. That allows the company to make use of its stellar credit rating and avoid massive taxes that would be triggered if it were to simply shift cash earned internationally into the U.S.

While this has triggered reports vilifying Apple for "avoiding" taxes, the company is actually "one of the top corporate income tax payers in the country, if not the largest," notes Steve Dowling, Apple's head of public relations.

In 2012, Apple paid $6 billion in federal corporate income taxes, which amounts to 1 out of every 40 dollars in corporate income taxes collected by the U.S. government Dowling told Bloomberg.

May 3, 2013


Apple continues to earn new cash faster than it is paying out in dividends and stock buybacks; even with its $10 billion in quarterly dividend payments over the past year and $10 billion in buybacks, Apple's cash hoard has grown to more than $146.6 billion by the end of June, the company's third fiscal quarter. Apple will continue paying the now slightly higher quarterly dividends about a month and a half after the end of each subsequent quarter, and reevaluate its dividend payments on an annual basis.

A dividend equivalent will also be paid to holders of Apple's restricted shares, although Cook 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 nearly $3 billion in quarterly dividend payments makes it one of the highest dividend payers in the world.
post #2 of 24
Like I said before, Apple is already paying enough in buybacks and dividends. It need to find other used of its cash that could help innovation and EPS growth.
post #3 of 24
Quote:
Originally Posted by herbapou View Post

Like I said before, Apple is already paying enough in buybacks and dividends. It need to find other used of its cash that could help innovation and EPS growth.
Agreed but think Apple should do all the buy back now while stock price still under $500 and reap the benefit of not paying dividends on those shares immediately
post #4 of 24
I happen to like those dividends and now that I'm getting them, I'd hate to give them up. Those dividends are the only guarantee I'll get anything from owning Apple considering Wall Street's perception Apple being doomed due to loss of smartphone market share. After seeing Apple go from $700 to $400 I just can't depend on Wall Street to value Apple fairly while it gives free passes to stocks like Amazon and Google. However, instead of share repurchases I'd certainly like to see Apple get into some other business unrelated to hardware. Wall Street continues to harp about Apple's falling hardware profit margins and asking a hardware company to stay above 40% profit margins is just downright unfair.

So, I'm hoping Apple can get into something like media content or cloud services. Apple should be able to afford the best servers in the world and should easily be able to hire experienced staff to maintain it. If Amazon can do it, why not Apple? Wall Street is always bragging about Amazon's AWS Cloud services, so why doesn't Apple set up one of its own. It would seem to be a good side business and supposedly it's rather profitable for Amazon. Apple could just take $5 billion or so and set up cloud services and get a few long-term contracts. That would be better than just letting the money sit in a bank collecting dust.
post #5 of 24

If Apple wanted to push their sales (and their profits) through the roof all they'd have to do is throw back a single percent of what they've collected through iTunes to every open iTunes account. if they do it as a credit to the account, you know it would be re-spent with iTunes along with a huge... Huge PR boost. Suddenly, apple would lose their "greedy" label and millions of people would feel Santa just rode into town.

"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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post #6 of 24
Hey Cookie, I'll take that $75 million. I mean, you know, if ya don't want it.
post #7 of 24
Quote:
Originally Posted by herbapou View Post

Like I said before, Apple is already paying enough in buybacks and dividends. It need to find other used of its cash that could help innovation and EPS growth.

Innovation doesn't just occur because you have lots of money to spend. Case in point: Microsoft.

post #8 of 24
@sessamoid: Apples innovatio is not driven by money nor by any cash position. Apple has got the smartest brains and PEOPLE MATTER, not monney. Right. Microsoft has all the top people as well but they don't have a leader who can advise them to do the things in the right way with the right target.

This differs Apple from Microsoft. Apple has some bright heads, living in the Apple DNA, which ist most important - the DNA, set by Steve, executed by Tim.

This gives reason for a good future that is not comparable with Microsoft.
post #9 of 24
Quote:
Originally Posted by Macky the Macky View Post

If Apple wanted to push their sales (and their profits) through the roof all they'd have to do is throw back a single percent of what they've collected through iTunes to every open iTunes account. if they do it as a credit to the account, you know it would be re-spent with iTunes along with a huge... Huge PR boost. Suddenly, apple would lose their "greedy" label and millions of people would feel Santa just rode into town.

Perhaps as iTunes gift cards, then the give back, comes back.
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From Apple ][ - to new Mac Pro I've used them all.
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post #10 of 24
Quote:
Originally Posted by MacHarry de View Post

@sessamoid: Apples innovatio is not driven by money nor by any cash position. Apple has got the smartest brains and PEOPLE MATTER, not monney. Right. Microsoft has all the top people as well but they don't have a leader who can advise them to do the things in the right way with the right target.

This differs Apple from Microsoft. Apple has some bright heads, living in the Apple DNA, which ist most important - the DNA, set by Steve, executed by Tim.

This gives reason for a good future that is not comparable with Microsoft.

Sorry for my ignorance but there's something that has been bothering me for while now.

When we get together with my friends and we start the "Apple talk" we always end up with the same conclusion: Apple will never disappoint us simply because apple is a different kind of company. When we think about it, some of the things Apple do can only be compared to a company that operates on a 1930 model. Specifically the fact that non of Apple's products are done in a way to be "used and disposed".

Now my question is: are things like that what people refer to as the DNA of the company?
And if they are: is the DNA something that is set somewhere as the base of everything the company does, or is it something more of a common wisdom every employe gets from being part of the company?
post #11 of 24
Quote:
Originally Posted by Drunkzombie View Post

Now my question is: are things like that what people refer to as the DNA of the company?
And if they are: is the DNA something that is set somewhere as the base of everything the company does, or is it something more of a common wisdom every employe gets from being part of the company?

The notion of ' corporate DNA' is perhaps one of the most overused pieces of bad business jargon.

However, this is a fairly decent article by three very smart guys: http://hbr.org/2009/12/the-innovators-dna
post #12 of 24
Quote:
Originally Posted by anantksundaram View Post

The notion of ' corporate DNA' is perhaps one of the most overused pieces of bad business jargon.

However, this is a fairly decent article by three very smart guys: http://hbr.org/2009/12/the-innovators-dna

It's more a matter of the culture of the company, the behavior of their executives and the treatment of their customers.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #13 of 24
Quote:
bought back and retired 36 million shares

 

This is the first time I am reading the shares are being retired; is this true? I would expect a bigger positive impact on the stock if so. 

post #14 of 24
Quote:
Originally Posted by Richard Getz View Post

This is the first time I am reading the shares are being retired; is this true? I would expect a bigger positive impact on the stock if so. 

Tim Cook announced the share buyback some time ago.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #15 of 24

I like it the way it is. I say keep a good dividend but don't go too crazy with buybacks and higher dividends.


Edited by DaveN - 8/15/13 at 10:24am
post #16 of 24
Quote:
Originally Posted by Everett Ruess View Post

Agreed but think Apple should do all the buy back now while stock price still under $500 and reap the benefit of not paying dividends on those shares immediately

That doesn't work. If Apple buys the shares today, they still have to pay the dividend to the person/organization which owned the shares as of the ex-dividend date which was last week.
Quote:
Originally Posted by anantksundaram View Post

The notion of ' corporate DNA' is perhaps one of the most overused pieces of bad business jargon.

Whether the phrase is overused or not, the concept of corporate culture is immensely powerful. It's almost impossible to make a meaningful change in a company unless you change the culture, as well.
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Gatorguy 5/31/13
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post #17 of 24
Quote:
Originally Posted by SpamSandwich View Post


Tim Cook announced the share buyback some time ago.

 

Share buyback is not the same as retiring shares. You can buy back shares and own them, or you can buy them back and retire them. To retire shares are to take them off the books, and that would greatly increase the EPS and its value of each share. 

post #18 of 24
Quote:
Originally Posted by Richard Getz View Post

Share buyback is not the same as retiring shares. You can buy back shares and own them, or you can buy them back and retire them. To retire shares are to take them off the books, and that would greatly increase the EPS and its value of each share. 

If true, I was not aware there was such a distinction. Thanks.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #19 of 24
Quote:
Originally Posted by Everett Ruess View Post


Agreed but think Apple should do all the buy back now while stock price still under $500 and reap the benefit of not paying dividends on those shares immediately

Right on.

Apple is smartly burning both ends of the candle.

 

While poor Blackberry dies on the vine.

Today the BB Z10 was $50 down payment here, while the iPhone5 was $250 down, both on 2 yr contracts.

Also today I got a nice BB Playbook folding case, which was once overpriced at $60 list,

 was marked on sale at $10, they were happy to take $5 for it. 1frown.gif

post #20 of 24
Quote:
Originally Posted by SpamSandwich View Post


If true, I was not aware there was such a distinction. Thanks.

 

It is true http://www.investopedia.com/ask/answers/05/retiredstock.asp

 

Buying back does not strengthen the individual share position as there is still the same amount of shares, although less for the market to buy/sell so there may be an initial increase in share price due to supply and demand, however, the company can resell those shares anytime, or give them away. If you retire, or cancel, the shares, you are removing them permanently from circulation, thus decreasing the overall number of shares available. 

 

When you retire shares, you increase the remaining share value as there are less shares available overall, just as issuing more shares would dilute your holdings. 

post #21 of 24
Quote:
Originally Posted by Richard Getz View Post

It is true http://www.investopedia.com/ask/answers/05/retiredstock.asp

Buying back does not strengthen the individual share position as there is still the same amount of shares, although less for the market to buy/sell so there may be an initial increase in share price due to supply and demand, however, the company can resell those shares anytime, or give them away. If you retire, or cancel, the shares, you are removing them permanently from circulation, thus decreasing the overall number of shares available. 

When you retire shares, you increase the remaining share value as there are less shares available overall, just as issuing more shares would dilute your holdings. 

That is incorrect. EPS is based on the number of shares active in the market. When a company buys back its own shares, they are no longer used in calculating EPS. Only outstanding shares are used in EPS calculations. The number of shares of Apple stock outstanding is down significantly since the peak earlier this year.

The only real difference between buying shares back and holding them vs buying shares back and retiring them is that you can't do anything with them after they're retired. Since Apple is buying them back and holding them, they could distribute them to employees via stock options or grants or they could re-sell them at a later date (with board approval). Apple has always had more shares than the number of outstanding shares - because they needed to have some shares to give to employees and board members.
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post #22 of 24
Quote:
Originally Posted by MacHarry de View Post

@sessamoid: Apples innovatio is not driven by money nor by any cash position. Apple has got the smartest brains and PEOPLE MATTER, not monney. Right. Microsoft has all the top people as well but they don't have a leader who can advise them to do the things in the right way with the right target.

This differs Apple from Microsoft. Apple has some bright heads, living in the Apple DNA, which ist most important - the DNA, set by Steve, executed by Tim.

This gives reason for a good future that is not comparable with Microsoft.

I agree here.  But Steve Jobs did not just depend on good people somehow doing good.  He got with educational experts and created Apple University.  Its training on how to make and keep a company great. 

 

and to Daniel ,  another great article.  I used to think your articles were good. But I keep reading people writing articles and they are just idiots.   Most do not want to do any research.  They seem to read some sub set of bloggers and off they go with the opinions.  This creates comments that obviously lack critical data.  

 

Even Klugman on the NYTs goes off on a rant and its clear to see that he just does not get it. Its like betting on the Titanic cause its a strong ship and its a big ocean, there is no chance that it will actually HIT an iceberg... even though it already did.  

 

To conclude.   Good comment.... and Daniel, you do a much better job than you usually get credit for.  Keep up the good work.  

 

Elder Norm  ( met you in Dallas a number of years ago)

post #23 of 24
Quote:
Originally Posted by jragosta View Post


That is incorrect. EPS is based on the number of shares active in the market. When a company buys back its own shares, they are no longer used in calculating EPS. Only outstanding shares are used in EPS calculations. The number of shares of Apple stock outstanding is down significantly since the peak earlier this year.

The only real difference between buying shares back and holding them vs buying shares back and retiring them is that you can't do anything with them after they're retired. Since Apple is buying them back and holding them, they could distribute them to employees via stock options or grants or they could re-sell them at a later date (with board approval). Apple has always had more shares than the number of outstanding shares - because they needed to have some shares to give to employees and board members.

 

My point was your second point. If the shares can be put back into circulation, then the value is not there. The market is smart enough to look at EPS and say, yes, EPS has drastically went up, but just as fast, it can go down if Apple brings those share back in. So retiring the shares would be of more value. 

post #24 of 24
Quote:
Originally Posted by Constable Odo View Post

I happen to like those dividends and now that I'm getting them, I'd hate to give them up. Those dividends are the only guarantee I'll get anything from owning Apple considering Wall Street's perception Apple being doomed due to loss of smartphone market share. After seeing Apple go from $700 to $400 I just can't depend on Wall Street to value Apple fairly while it gives free passes to stocks like Amazon and Google. However, instead of share repurchases I'd certainly like to see Apple get into some other business unrelated to hardware. Wall Street continues to harp about Apple's falling hardware profit margins and asking a hardware company to stay above 40% profit margins is just downright unfair.

So, I'm hoping Apple can get into something like media content or cloud services. Apple should be able to afford the best servers in the world and should easily be able to hire experienced staff to maintain it. If Amazon can do it, why not Apple? Wall Street is always bragging about Amazon's AWS Cloud services, so why doesn't Apple set up one of its own. It would seem to be a good side business and supposedly it's rather profitable for Amazon. Apple could just take $5 billion or so and set up cloud services and get a few long-term contracts. That would be better than just letting the money sit in a bank collecting dust.

 

Especially concerning the dividends, I agree with you. I've often found it odd or amusing when I've read posts here and other places where people actually complain about receiving the dividend. Now, if the existence of a dividend had a direct cause & effect on share price appreciation (or lack thereof), that would be one thing. But that is not the case. At best, you might find a mild correlation. And even then, despite how some people like to think that when the share price rises that they have "made money", the only time you (actually) make money on a stock is when you sell it at a profit. That's it! That's all there is. Even if you sell covered calls, you're making money from the option, not the stock itself - I can just as easily sell naked calls... no need to own the stock to accomplish that.

 

So since I've felt no pressing need to sell the stock (although I would have surely sold all of my shares at $700 had I known that the stock would sink to the high $300's within 12 months - and I would have bought them back at $400... these darn 20/20 Hindsight Goggles never work like they're supposed to!!!), collecting the dividend has indeed put money in my pocket. There may come a time when selling some or all of my Apple position will be necessary or advantageous. But for right now, I view my AAPL investment more like a piece of income producing property, with the dividend being like a rental receipt.

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