Shares of Apple, Inc. near ex-dividend as it gears up to distribute $2.7 billion to shareholders

Posted:
in AAPL Investors edited May 2014
On May 15, Apple will pay "shareholders of record" the company's new higher quarterly dividend of $3.29 per share, but investors need to have purchased the company's stock by the market's close on Wednesday in order to qualify.

cash


Apple has been automatically paying its shareholders a dividend about a month and a half after the end of each fiscal quarter ever since it declared its modern dividend plan in the summer of 2012.

At the current stock price of $592 at its close today, the dividend yield is 2.22 percent. Apple recently announced that it would increase its dividend from the previous $3.05, the second increase in two years.

The new dividend amount is an odd $3.29, making it equally divisible by seven. In June, Apple will split its stock 7-1, an action that won't have a direct impact on its share value because the stock price, dividend and outstanding share count will all be adjusted by the same multiple.

AAPL Dividends & Buybacks

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.

Dividends are a minority portion of Apple's shareholder capital return program, the majority of which has been earmarked for buying back outstanding shares, which increases the scarcity (and therefore value) of Apple's stock by taking shares off the market and retiring them. Removing shares from circulation also enhances the company's closely-watched earnings per share metrics.

Over the past year, Apple has been paying out around $2.8 billion in dividends every quarter, a figure that had increased 15 percent over the $2.5 billion Apple had been paying in 2012, before it first increased its dividend payments last May.



However, Apple has now bought back and retired so many of its shares that its total dividend payment across its outstanding shares has now dropped down to $2.7 billion.

Last quarter, the company spent an additional $18 billion on stock repurchases, and announced the retiring of over 30 million additional shares.

Apple had just $14 billion of its original $90 billion stock buyback plan remaining when it increased the program last month. Since the stock buybacks were initiated, Apple has retired 80 million shares.
«134

Comments

  • Reply 1 of 61
    apple ][apple ][ Posts: 8,360member

    I'm not claiming that this would be a good idea or even profitable, but technically speaking, I assume that somebody could buy some shares of AAPL on Monday, May 12 at 3:59 PM, and then dump all those shares on Tuesday, May 13 at 6:01 AM, and still receive the dividend? Is that correct? 

     

    The times listed are EST.

  • Reply 2 of 61
    justp1ayinjustp1ayin Posts: 205member
    apple ][ wrote: »
    I'm not claiming that this would be a good idea or even profitable, but technically speaking, I assume that somebody could buy some shares of AAPL on Monday, May 12 at 3:59 PM, and then dump all those shares on Tuesday, May 13 at 6:01 AM, and still receive the dividend? Is that correct? 

    The times listed are EST.

    I believe you can yes. But you gotta take into consideration fluctuation and commissions in there as well.
  • Reply 3 of 61
    revenantrevenant Posts: 485member

    if it was at all possible, i would buy back all of carl ichan's stock.  get that guy out before he tries another ridiculous stunt.

  • Reply 4 of 61
    williamhwilliamh Posts: 637member
    I think technically you are correct, but it doesn't really work that way. I think the trade takes 3days to settle before you're the "shareholder of record." And in any event, the shares will open down by about the dividend amount after it's paid.
  • Reply 5 of 61
    solipsismxsolipsismx Posts: 19,566member
    apple ][ wrote: »
    I'm not claiming that this would be a good idea or even profitable, but technically speaking, I assume that somebody could buy some shares of AAPL on Monday, May 12 at 3:59 PM, and then dump all those shares on Tuesday, May 13 at 6:01 AM, and still receive the dividend? Is that correct? 

    The times listed are EST.

    Overall it's more complex than I'll make it out to be here but the general rule that will apply to everyone(?) on this forum is that you need to purchase the stock 3 days before the record date in order to get counted for that payout. In this case the record date is May 12th so you'd have to buy before the close of the market on May 6th. After the close of business on May 12th you could then sell your shares and still get a dividend payout.


    edit: Corrected dates.
  • Reply 6 of 61
    solipsismxsolipsismx Posts: 19,566member
    justp1ayin wrote: »
    I believe you can yes. But you gotta take into consideration fluctuation and commissions in there as well.
    revenant wrote: »
    if it was at all possible, i would buy back all of carl ichan's stock.  get that guy out before he tries another ridiculous stunt.
    williamh wrote: »
    I think technically you are correct, but it doesn't really work that way. I think the trade takes 3days to settle before you're the "shareholder of record." And in any event, the shares will open down by about the dividend amount after it's paid.

    I believe the T+3 Process would prohibit that since you're not the company's books until the end of that 3rd day.

  • Reply 7 of 61
    carson o'geniccarson o'genic Posts: 1,278member

    From the article:

     

    "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."

     

    In a perfect market the value of the company prior to a dividend payout includes the value of the cash, after they pay the dividend the increased selling of the stock reduces the value of the company.  So in theory, the value of the stock the day after will be exactly that much less as you got paid in dividend per share.  

     

    Off course the stock market is weird and anything can happen.  I have not seen much of a drop in Apple stock price after it goes ex-dividend, but that is mostly because 2.8 billion dividend payout is only a fraction of the value of the company.  Your idea could work, but since everyone is thinking the same thing, chances are you would sell for less than you bought.  There appeared to be a minor pullback from the recent gains in the last couple of days so you could gamble and buy now and sell next week.  If you can afford to buy enough stock to make the cost of buying and selling trivial, then you could get the dividend and gain on the upswing of the daily minor fluctuation of the stock - or not.  IF you plan to buy and hold, then obviously now is better than next week.

  • Reply 8 of 61
    apple ][apple ][ Posts: 8,360member
    Quote:
    Originally Posted by SolipsismX View Post





    Overall it's more complex than I'll make it out to be here but the general rule that will apply to everyone(?) on this forum is that you need to purchase the stock 3 days before the record date in order to get counted for that payout. In this case the record date is May 12th so you'd have to buy before the close of the market on May 9th. After the close of business on May 12th you could then sell your shares and still get a dividend payout.

     

    Perhaps my question was more complicated than I first thought.

     

    I got the impression from the OP that it was May 12, but you're now saying that it's May 9? 

     

    I'm just curious about what general rule you were mentioning that would apply to everyone on this forum?

     

    edit - I see, you're talking about the T3 rule, gotcha. I don't think that it applies to me though.

  • Reply 9 of 61
    solipsismxsolipsismx Posts: 19,566member
    apple ][ wrote: »
    Perhaps my question was more complicated than I first thought.

    I got the impression from the OP that it was May 12, but you're now saying that it's May 9? 

    I'm just curious about what general rule you were mentioning that would apply to everyone on this forum?

    The record date is the 12th, but have you ever sold stock before and wanted to cash out? It takes three days. That's the T+3 Process. That also works the other way so if you bought stock on May 10th Apple wouldn't record your transaction until the 14th (even though your trade value started at whatever you bought it for on the 10th) so you wouldn't receive the dividends as those were taken from whomever was on record as of the close of day on the 12th, as noted in the link.
  • Reply 10 of 61
    solipsismxsolipsismx Posts: 19,566member
    apple ][ wrote: »
    edit - I see, you're talking about the T3 rule, gotcha. I don't think that it applies to me though.

    Are you not talking about stocks?
  • Reply 11 of 61
    apple ][apple ][ Posts: 8,360member
    Quote:

    Originally Posted by SolipsismX View Post





    The record date is the 12th, but have you ever sold stock before and wanted to cash out? It takes three days. That's the T+3 Process. That also works the other way so if you bought stock on May 10th Apple wouldn't record your transaction until the 14th (even though your trade value started at whatever you bought it for on the 10th) so you wouldn't receive the dividends as those were taken from whomever was on record as of the close of day on the 12th, as noted in the link.

     

    I see what you mean now, the settlement period, when buying and selling.

     

    I wrote that it didn't apply to me, but I guess that it does, it's just that I don't notice it, because even though I don't really daytrade much, they classified me as one after I violated the rules and did more than the max limit of roundtrip trades in a five day period. So now, I don't have to worry about breaking any rules like that, I just trade however often I want. I could buy and sell APPL 50 times in one day if I wanted to, not that I would of course.

  • Reply 12 of 61
    apple ][apple ][ Posts: 8,360member
    Quote:

    Originally Posted by SolipsismX View Post





    Are you not talking about stocks?

    Yes, you can see my reply, above this one.

  • Reply 13 of 61
    SpamSandwichSpamSandwich Posts: 30,734member
    Keep in mind also that buying and then immediately selling a stock results in a higher capital gains tax than if you buy and hold.

    https://turbotax.intuit.com/tax-tools/tax-tips/Investments-and-Taxes/Guide-to-Short-term-vs-Long-term-Capital-Gains-Taxes--Brokerage-Accounts--etc--/INF22384.html
  • Reply 14 of 61
    chabigchabig Posts: 622member
    Quote:

    Originally Posted by Apple ][ View Post

     

    I'm not claiming that this would be a good idea or even profitable, but technically speaking, I assume that somebody could buy some shares of AAPL on Monday, May 12 at 3:59 PM, and then dump all those shares on Tuesday, May 13 at 6:01 AM, and still receive the dividend? Is that correct? 


    No. The system is designed so you can't take advantage of it that way. May 12th is the "Record date". If you are on record as a shareholder on May 12th, you get the dividend. May 8th is the "Ex-dividend" date. If you buy shares on or after May 8th, you don't get the dividend because you won't be on record as of May 12th. Not to worry, though, the stock price on May 8th is reduced by the amount of the dividend. So buyers on May 8th don't get the dividend, but they also buy the stock cheaper. If you tried to cheat the system by buying stock on May 7th, you'd get the dividend, but when you sell on May 8th the price you sell at will have been reduced by the dividend amount.

  • Reply 15 of 61
    apple ][apple ][ Posts: 8,360member
    Quote:



    Originally Posted by chabig View Post

     

    No. The system is designed so you can't take advantage of it that way. May 12th is the "Record date". If you are on record as a shareholder on May 12th, you get the dividend. May 8th is the "Ex-dividend" date. If you buy shares on or after May 8th, you don't get the dividend because you won't be on record as of May 12th. Not to worry, though, the stock price on May 8th is reduced by the amount of the dividend. So buyers on May 8th don't get the dividend, but they also buy the stock cheaper. If you tried to cheat the system by buying stock on May 7th, you'd get the dividend, but when you sell on May 8th the price you sell at will have been reduced by the dividend amount.


     

    Thanks for the detailed explanation. I now understand how the dividend dates work.

     

    Basically, the OP is a bit late then, because there is no chance for anybody to get the dividend, if they don't already own AAPL as of this moment, because it's already May 8th.

  • Reply 16 of 61
    slurpyslurpy Posts: 5,107member
    Quote:

    Originally Posted by Apple ][ View Post

     

    I'm not claiming that this would be a good idea or even profitable, but technically speaking, I assume that somebody could buy some shares of AAPL on Monday, May 12 at 3:59 PM, and then dump all those shares on Tuesday, May 13 at 6:01 AM, and still receive the dividend? Is that correct? 

     

    The times listed are EST.


     

    Have you ever bought or sold a single share of a single stock? You state you own some, but it seems doubtful from that question. There's trading fees. Doing what you describe would result in a net loss, not a net gain, especially for such a pricey stock. 

  • Reply 17 of 61
    apple ][apple ][ Posts: 8,360member
    Quote:

    Originally Posted by Slurpy View Post

     

     

    Have you ever bought or sold a single share of a single stock? You state you own some, but it seems doubtful from that question. There's trading fees. Doing what you describe would result in a net loss, not a net gain, especially for such a pricey stock. 


    Did you miss the part of my question where I wrote that I wasn't claiming that it was a good idea or even a profitable idea? I just wanted to know if it was possible.

     

    And I don't own any AAPL at the moment. And the trading fees are the same for me, regardless if it's AAPL or some $4 dollar stock.

  • Reply 18 of 61
    chabigchabig Posts: 622member
    Quote:

    Originally Posted by Apple ][ View Post

     

    Basically, the OP is a bit late then, because there is no chance for anybody to get the dividend, if they don't already own AAPL as of this moment, because it's already May 8th.


    That's correct. If you owned or purchased the shares yesterday, May 7th, you get the dividend. If you buy shares on or after May 8th, you don't. AAPL closed on May 7th at $592.33. When the stock opens for trading on May 8th, it's price will be adjusted down $3.29 (the amount of the dividend).

  • Reply 19 of 61
    konqerrorkonqerror Posts: 685member
    Quote:
    Originally Posted by SpamSandwich View Post



    Keep in mind also that buying and then immediately selling a stock results in a higher capital gains tax than if you buy and hold.

     

    Exactly. Every time Apple issues a dividend AppleInsider puts out this article, and people think they should buy to get free money. In fact it's the complete wrong thing to do.

     

    Say Apple's stock price is $600.

    Buy the day of the ex-dividend date, you pay $600. Then you get $3.29 handed right back to you taxed at ordinary dividend rates = ordinary income.

    Buy the day after, you pay $600-$3.29= $596.71. You hold on to your $3.29 untaxed.

     

    The benefit of a dividend only is if you hold on to the stock greater than a year. Basically here, $3.29 of each share is being "sold" for you, and it's being taxed at qualified dividend rates, which is as much as 20% lower than ordinary income. (Under George W, for many people in the lowest brackets, qualified dividends were untaxed. Obama raised them back to 15%)

  • Reply 20 of 61
    davidwdavidw Posts: 945member
    Quote:
    Originally Posted by konqerror View Post

     

     

    The benefit of a dividend only is if you hold on to the stock greater than a year. Basically here, $3.29 of each share is being "sold" for you, and it's being taxed at qualified dividend rates, which is as much as 20% lower than ordinary income. (Under George W, for many people in the lowest brackets, qualified dividends were untaxed. Obama raised them back to 15%


    I believe President Obama tax plan left the tax on qualified dividend the same as it was in Former President Bush plan, for all the tax brackets except the highest 35%. At the 35% bracket all dividend are added to ordinary income and taxed at 35% or 39.5%. But it's still 0% for the bottom brackets and 15% for the others. I'm pretty sure I didn't have to pay any taxes on my qualified AAPL dividend for 2012 and 2013 after going though that confusing calculation in the tax book. And I'm not sure if that's a good thing because if I did have to pay 35% or 39.5% tax on those dividend, my income would have be in the $400,000 range.  

Sign In or Register to comment.