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

Posted:
in AAPL Investors edited January 2014
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.

In 2012, "Apple paid $6B in federal corporate income taxes: 1/40th of all corporate income taxes collected by the US" bloomberg.com/news/2013-05-0?

? Daniel Eran Dilger (@DanielEran)


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.
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Comments

  • Reply 1 of 25
    herbapouherbapou Posts: 2,223member
    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.
  • Reply 2 of 25
    herbapou wrote: »
    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
  • Reply 3 of 25
    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.
  • Reply 4 of 25


    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.

  • Reply 5 of 25


    Hello, Tally!


     


    Where are your personal insults?


     


    "shut up and go away" is kind of lame, don't you think, Tally-boy?


     


    Ah I see, the admins of this site now keep you on a tight leash...


     


     


    KOREA fighting!

  • Reply 6 of 25

    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.



     


    Do you fap to Apple, fanboi?

  • Reply 7 of 25
    Hey Cookie, I'll take that $75 million. I mean, you know, if ya don't want it.
  • Reply 8 of 25

    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.

  • Reply 9 of 25
    @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.
  • Reply 10 of 25
    MacProMacPro Posts: 18,457member
    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.
  • Reply 11 of 25
    @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?
  • Reply 12 of 25
    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
  • Reply 13 of 25
    SpamSandwichSpamSandwich Posts: 31,504member
    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.
  • Reply 14 of 25

    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. 

  • Reply 15 of 25
    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.
  • Reply 16 of 25
    davendaven Posts: 548member


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

  • Reply 17 of 25
    jragostajragosta Posts: 10,473member
    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.
    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.
  • Reply 18 of 25

    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. 

  • Reply 19 of 25
    SpamSandwichSpamSandwich Posts: 31,504member
    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.
  • Reply 20 of 25
    joshajosha Posts: 901member

    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. image

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