Apple Inc. shares approach ex-dividend as it gears up to distribute $2.7 billion to shareholders

Posted:
in AAPL Investors edited May 2015
On May 14, Apple will pay shareholders of record a quarterly dividend of $0.52 per share, but investors must have settled ownership of the company's stock by Monday, May 11, in order to qualify.

cash


Apple has been 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.

The May dividend will be the fourth to occur since the company issued a 7-for-1 stock split. That split also converted the dividend from $3.29 per share to 47 cents per share.

Apple just announced plans to increase its May dividend from 47 cents to 52 cents per share during its Q2 earnings conference call.

Since the stock split, Apple repurchased a surprising $17 billion of its own stock in the September quarter; $5 billion of stock in open market purchases during its December quarter (Apple's Fiscal Q1 2015); and another $7 billion of stock in open market purchases during its March quarter (Apple's Fiscal Q2 2015).

The company now has 5.761 billion shares outstanding.

Apple shares outstanding Q2 2015


Since the beginning of 2014, Apple shares are up 59.2 percent, compared to Microsoft's 27.98 percent gain or Google's 3.43 percent decline in nonvoting GOOG C class shares and 1.61 percent loss in standard GOOGL A class shares.

Since the start of 2015, Apple shares are up 16.51 percent, compared to Microsoft's 2.06 percent gain or Google's 2.79 percent gain in nonvoting GOOG C class shares and 4 percent gain in standard GOOGL A class shares. Google split its shares into the two classes and awarded investors one of each, effectively stripping investors of half their voting rights through the "dividend" dilution.

Apple MSFT GOOG Q2 2015

AAPL Dividends & Buybacks

Dividends are a minority portion of Apple's shareholder capital return program, the majority of which has been earmarked for buying back outstanding shares.

Capital Return AAPL Q2 2015


Buybacks increase 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 last four quarters, Apple has repurchased $34 billion worth of its stock off the market or via accelerated repurchase programs.

"The Company also plans to increase its dividend on an annual basis, subject to declaration by the Board of Directors," Apple states in its 10-K filing, a comment reiterated by the company in its most recent earnings conference call.

Over the past four quarters, Apple has paid out over $11 billion in dividends to its shareholders, distributing about $2.8 billion every quarter, although that number is decreasingly slightly in tandem with the company's stock buybacks.

Apple's volume of stock buybacks have reached the 5 percent threshold to qualify for inclusion in the "NASDAQ BuyBack Achievers Index," as well as the PowerShares Buyback Achievers Portfolio, as noted in a report by ETFtrends.

In total, Apple has spent $80 billion on stock buybacks since initiating its capital return program, including an opportunistic $14 billion share grab initiated after the stock plunged more than 8 percent last January following the company's holiday Q1 release which detailed its highest ever quarterly revenues and operating profits--results that the tech media depicted as "disappointing."

Combined with dividend payments and net share settlements, Apple has spent $112.6 billion on capital return since mid 2012, and it plans to return a total of $200 billion over the next two years.

Apple is currently using much of its domestic U.S. cash flow to finance stock buybacks and dividend payments, and is also issuing bonds at extremely low interest rates to help pay for its capital return programs.

It currently holds $171 billion of its total $194 billion cash reserves overseas; spending those funds domestically would incur a substantial tax penalty unless the U.S. Congress approves a tax break to enable and incentivize American firms to invest their foreign earnings in America.
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Comments

  • Reply 1 of 49
    fallenjtfallenjt Posts: 3,980member
    Quote:
    Originally Posted by sog35 View Post

     

    Ex-dividend has come and past already.  That was yesterday.

     

    Can't believe Apple Insider gets this wrong every single quarter.

     

    You needed to own the shares at the end of Wed to get the dividend next week.




    I mentioned the Ex-dividend day 2 days ago. AI needs to learn more about stock market.


    Quote:



    Originally Posted by fallenjt View Post

     

    And all of these news come with the price: AAPL dropped to below $124. This is fcking buying time right before ex-dividend day tomorrow. I just grab another 100 shares and set limit sale all my AAPL at $135...(by WWDC hopefully). Move to long term investment on ETF instead, guys. Damn stock so volatile because of the manipulative idiots in Wall Street and that pissed me off.

     


  • Reply 2 of 49
    radarthekatradarthekat Posts: 3,133moderator
    Quote:

    Originally Posted by sog35 View Post

     

    Ex-dividend has come and past already.  That was yesterday.

     

    Can't believe Apple Insider gets this wrong every single quarter.

     

    You needed to own the shares at the end of Wed to get the dividend next week.




    Technically Apple Insider has it correct.  But who, ever, talks about the share settlement date?  Ex-dividend date is the critical date for anyone buying shares in the normal manner.  And yes, Thursday at the open the stock went ex-dividend, meaning that a person would need to have purchased before the end of Wednesday's after-market session (8pm) in order for newly purchased shares to deliver to that person this quarter's dividend.

  • Reply 3 of 49
    correctionscorrections Posts: 1,386member
    The article isn't wrong. It also isn't offering buying advice on securities. It is detailing Apple's dividend payments.

    "May 14, Apple will pay shareholders of record a quarterly dividend of $0.52 per share, but investors must have settled ownership of the company's stock by Monday, May 11, in order to qualify."

    To have settled ownership by Monday, you'd need to have purchased the shares Thursday May 7.
  • Reply 4 of 49
    jonljonl Posts: 210member
    Quote:
    Originally Posted by Corrections View Post



    The article isn't wrong. It also isn't offering buying advice on securities. It is detailing Apple's dividend payments.



    "May 14, Apple will pay shareholders of record a quarterly dividend of $0.52 per share, but investors must have settled ownership of the company's stock by Monday, May 11, in order to qualify."



    To have settled ownership by Monday, you'd need to have purchased the shares Thursday May 7.



    Investors don't actively "settle ownership", and putting it in those terms is obscure and confusing, requring some arithmetic that accounts for closed days, which further means consulting a calendar The ex-dividend term is much more straightforward; if you don't own the stock prior to it going ex-dividend, i.e. before its ex-dividend date, you're excluded from the dividend.

     

    ETA: And sog is correct. The ex-dividend date has come and gone on May 7, and you would need to have purchased on May 6 or earlier.

  • Reply 5 of 49
    fallenjtfallenjt Posts: 3,980member
    Quote:

    Originally Posted by RadarTheKat View Post

     



    Technically Apple Insider has it correct.  But who, ever, talks about the share settlement date?  Ex-dividend date is the critical date for anyone buying shares in the normal manner.  And yes, Thursday at the open the stock went ex-dividend, meaning that a person would need to have purchased before the end of Wednesday's after-market session (8pm) in order for newly purchased shares to deliver to that person this quarter's dividend.


    "Investors" means "stock brokers" in this case, not individuals who own AAPL. Yes, Investors need to settle or "record" stock by the end of May 11. However, the title says "approach Ex-dividend" is misleading. Suppose to be "approach record day". Ex-dividend day is 2 business days before the "record day" which was on May 7 and public needs to own AAPL before Ex-date to qualify for dividend, so May 6 was the cut off date.

  • Reply 6 of 49
    schlackschlack Posts: 700member
    i'm surprised the window between the ex-div date and the payout is so tight. aren't these typically further apart?
  • Reply 7 of 49
    radarthekatradarthekat Posts: 3,133moderator
    sog35 wrote: »
    WRONG.  Apple insider did not get it right.

    In the title it says AAPL is approaching ex-dividend.  We are two days past Ex-Dividend.  

    True. They got it partly correct, just not any part that's worth a hoot. And even their Corrections comment got it wrong. Thursday was ex-dividend, meaning without dividend. As you and I stated, you'd have had to purchase prior to Thursday, not on Thursday as Corrections indicated.
  • Reply 8 of 49

    Why is everything Apple attempts to do is seen as "disappointing" by investors?  It would seem to me Apple offers as much to shareholders as any other company around.  Insatiable greed can't be satisfied if that's what they're expecting.  How is what Apple offers shareholders seen any worse than what Google, Amazon or Microsoft is offering?  If analysts are always claiming that Apple has zero growth, then why should Apple exhaust any more of its cash since this is supposedly as high as Apple is going.  Wall Street's demands seem contradictory and make little sense to me unless they're deliberately trying to ruin Apple financially.  How is Apple giving away its entire cash bundle going to be good for the company in any way?  Once its cash is gone, the greedy investors will simply dump Apple stock and move on to something else.  Apple's giving out a fair amount of cash but the company isn't getting a higher premium than any of its peers who are giving out a lesser amount, so what's the point.

     

    I don't really understand why Apple buying back shares doesn't help the P/E ratio since it's pushing the EPS ever higher.  I'd rather Apple give me higher dividends rather than buybacks because I understand dividends a lot better and it blunts Apple's volatility to some degree, meaning even if the share price drops, the dividend still puts money in my pocket.  I'm not complaining about Apple's cash distribution methods because I think Apple knows more about its own financial outlook better than I do.  I still have some hope that there will be a repatriation tax holiday at some point, but it's likely to be a long way off, if ever in my lifetime.  Anyway, as I see it, Apple is wasting its time trying to appease greedy investors because I'm sure they'll always be disappointed for some reason or another.  I think the analysts who criticize Apple are simply arrogant bastards who don't have any concept of a company of Apple's wealth.

  • Reply 9 of 49
    radarthekatradarthekat Posts: 3,133moderator
    I don't really understand why Apple buying back shares doesn't help the P/E ratio since it's pushing the EPS ever higher.

    Buying back shares isn't so much about raising the P/E ratio as it is about raising the earnings per share. Same earnings against lower number of shares equals higher earnings per share number. And this, applied against the existing P/E ratio equals a higher stock price.

    Buying back shares also increases the efficiency of each dollar invested in the business. Rather than having a dollar invested in Apole buying 80 cents worth of the ongoing business that is Apple, plus 20 cents worth of static cash, reducing the cash and cash equivalents means that more of an invested dollar is buying the business and less is paying for a share of non-performing cash. This, to my mind, is the most significant reason for distributing cash to shareholders, either in the form of dividends or in the form of share repurchases.

    As long as the business is confident it will increase earnings organically at a rate that is better than investors will likely achieve after paying tax on cash dividends and then investing those dividends somewhere else, a business, in my view, serves its investors better through allocating excess cash to share repurchases. This is what Apple seems to think too, apparently, since they are dedicating the majority of excess cash distributions to share repurchases.
  • Reply 10 of 49
    radster360radster360 Posts: 540member
    Quote:

    Originally Posted by Steffen Jobbs View Post

     

    Why is everything Apple attempts to do is seen as "disappointing" by investors?  It would seem to me Apple offers as much to shareholders as any other company around.  Insatiable greed can't be satisfied if that's what they're expecting.  How is what Apple offers shareholders seen any worse than what Google, Amazon or Microsoft is offering?  If analysts are always claiming that Apple has zero growth, then why should Apple exhaust any more of its cash since this is supposedly as high as Apple is going.  Wall Street's demands seem contradictory and make little sense to me unless they're deliberately trying to ruin Apple financially.  How is Apple giving away its entire cash bundle going to be good for the company in any way?  Once its cash is gone, the greedy investors will simply dump Apple stock and move on to something else.  Apple's giving out a fair amount of cash but the company isn't getting a higher premium than any of its peers who are giving out a lesser amount, so what's the point.

     

    I don't really understand why Apple buying back shares doesn't help the P/E ratio since it's pushing the EPS ever higher.  I'd rather Apple give me higher dividends rather than buybacks because I understand dividends a lot better and it blunts Apple's volatility to some degree, meaning even if the share price drops, the dividend still puts money in my pocket.  I'm not complaining about Apple's cash distribution methods because I think Apple knows more about its own financial outlook better than I do.  I still have some hope that there will be a repatriation tax holiday at some point, but it's likely to be a long way off, if ever in my lifetime.  Anyway, as I see it, Apple is wasting its time trying to appease greedy investors because I'm sure they'll always be disappointed for some reason or another.  I think the analysts who criticize Apple are simply arrogant bastards who don't have any concept of a company of Apple's wealth.




    This things came up many time here and other boards such as MarketWatch, CNBC, etc. As mentioned earlier, I also think that manipulation is certainly going on here. The market has unrealistic expectation from Apple, but even than, as the chart shows above, it certainly is performing lot better than others. That just speaks volumes - Even after bad treatment the stock is considerably doing good. 

     

    As far as giving dividends and buyback, I also thought it was a wrong thing to do, especially buybacks (when Apple does it, it is called "Financial Engineering" and for others it is praised), but I think it does help the value of outstanding stocks. Apple used to have "zero" debt, but with all the bonds created, it now has debt. But, at this point, borrowing money is dirt cheap (yes, I wish us individual had similar access to free money), and this debt is not costing Apple much. I am sure the tax laws are bound to change which will allow Apple to bring those offshore money back in US to payoff this debt. 

     

    Finally, the world's richest company probably has the best financial folks working for them and they are certainly much smarter money managers than the anal-ysts out there who are always knocking this great company.

  • Reply 11 of 49
    dr millmossdr millmoss Posts: 5,403member
    Quote:

    Originally Posted by Steffen Jobbs View Post

     

    Why is everything Apple attempts to do is seen as "disappointing" by investors?


     

    It isn't. The statement makes for clicks but is untrue.

  • Reply 12 of 49
    dr millmossdr millmoss Posts: 5,403member
    Quote:

    Originally Posted by sog35 View Post

     

     

    One word: Manipulation




    One better word: nonsense.

  • Reply 13 of 49
    dr millmossdr millmoss Posts: 5,403member
    Quote:

    Originally Posted by RadarTheKat View Post





    Buying back shares isn't so much about raising the P/E ratio as it is about raising the earnings per share. Same earnings against lower number of shares equals higher earnings per share number. And this, applied against the existing P/E ratio equals a higher stock price.

     

    In theory at least both PE and EPS should increase with fewer shares in the float, all other things being equal.

  • Reply 14 of 49
    jonljonl Posts: 210member
    Quote:

    Originally Posted by Dr Millmoss View Post

     
    Quote:
    Originally Posted by sog35 View Post

     

     

    One word: Manipulation




    One better word: nonsense.




    How do  you explain all those Fridays when it closes exactly at max pain or a nice, round, otherwise unexplained number? There have been quite a few such occurrences in the last few years.

  • Reply 15 of 49
    applejakesapplejakes Posts: 47member
    New to the board so forgive my ignorance.

    Apple is going to distribute 2.7B in dividends. That equates to 5.3B shares. Current float is 5.76B shares.

    Am I missing something or have they already bought back a significant amount of shares in a week?

    Or am I crazy for thinking that?
  • Reply 16 of 49
    dr millmossdr millmoss Posts: 5,403member
    Quote:

    Originally Posted by jonl View Post

     



    How do  you explain all those Fridays when it closes exactly at max pain or a nice, round, otherwise unexplained number? There have been quite a few such occurrences in the last few years.


     

    Alien abduction. I mean, obviously.

  • Reply 17 of 49
    anantksundaramanantksundaram Posts: 19,385member

    I don't really understand why Apple buying back shares doesn't help the P/E ratio since it's pushing the EPS ever higher. 

    Because P/E ratio has nothing to do with the EPS. It is determined primarily by a company's expected long run growth rate, and it's cost of capital (i.e., the market's perception of the company's risks in the long run).
  • Reply 18 of 49
    anantksundaramanantksundaram Posts: 19,385member

    In theory at least both PE and EPS should increase with fewer shares in the float, all other things being equal.

    Please explain why the P/E ratio should increase with fewer shares in the float.
  • Reply 19 of 49
    irun262irun262 Posts: 121member
    What I'd like to know is when is it safe to sell the shares again (and yet still get the full dividend)?
  • Reply 20 of 49
    quinneyquinney Posts: 2,526member
    irun262 wrote: »
    What I'd like to know is when is it safe to sell the shares again (and yet still get the full dividend)?

    Yesterday. Also note that the day is approaching because space-time is curved, or something.
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