Apple extends share buybacks by $90B, raises dividends by 5%

AppleInsider

Apple has announced that it has authorized a new share buyback program totaling $90 billion and is raising its dividend by 5%.

Apple logo

The announcement came after Apple reported stronger-than-expected results for the March quarter, with revenues totaling $94.0 billion.

Apple raised its dividend to $0.23 per share, up 5%. It is payable on May 12 to shareholders of record as of the close of business on May 9.

Since 2012, Apple has been buying back its own shares at an extraordinary rate -- Apple is known for spending more on share repurchases than similar tech giants like Meta or Alphabet. Apple's total share repurchases have totaled $274.5 billion, with just $20.4 billion in the December quarter.

Apple spent $85.5 billion to repurchase shares in 2021, and issued $14.5 billion in dividends.

Companies generally buy back their own stock for a number of reasons, including consolidation and to drive value for shareholders -- generally meaning a higher share price.


Read on AppleInsider

lkrupp

My IRA thanks you, AAPL. Good job, Mr. Cook and company. 

JWSC

I’m waiting for the ‘innumerati’ to chime in on how share buybacks are like throwing money in the fireplace. 😆

Xed

JWSC said:

I’m waiting for the ‘innumerati’ to chime in on how share buybacks are like throwing money in the fireplace. 😆

"innumerati" LOL Love it

crowley

JWSC said:

I’m waiting for the ‘innumerati’ to chime in on how share buybacks are like throwing money in the fireplace. 😆

Considering that you think a stock buyback directly raises the stock price so that market cap is unchanged it’s a bit rich of you to be calling anyone innumerati. 

cia

With a stable large company like Apple, stock buybacks are great incentive to hold the stocks long.  Thanks to good management the price generally (over years) goes up, bumped along with some extra oomph by those buybacks.   I have no complaints about them buying back copious numbers of shares as long as the staff (at all levels) are well compensated and they don't scrimp on R&D at all.

delreyjones

JWSC said:

I’m waiting for the ‘innumerati’ to chime in on how share buybacks are like throwing money in the fireplace. 😆

Correct me if I’m wrong, but I don’t believe buy backs or dividends ever happened when Jobs was in charge.  He said he wanted to “keep his powder dry”.  Was Jobs innumerate?

klink172

My retirement is looking even more comfortable. 

flydog

JWSC said:

I’m waiting for the ‘innumerati’ to chime in on how share buybacks are like throwing money in the fireplace. 😆

Buybacks help increase stock price assuming PEs remain constant.  But during a recession share buybacks are indeed much like throwing money in a fireplace since PEs generally contract. Also the only way to cash in on a buyback is to sell stock, which brings worse tax consequences compared to dividends.  

It would be much better if Apple distributed part or all of the $90 billion as dividends, which right now are a paltry .5%. 

flydog

delreyjones said:

JWSC said:

I’m waiting for the ‘innumerati’ to chime in on how share buybacks are like throwing money in the fireplace. ߘ榬t;/div>

Correct me if I’m wrong, but I don’t believe buy backs or dividends ever happened when Jobs was in charge.  He said he wanted to “keep his powder dry”.  Was Jobs innumerate?

You are wrong. Apple began paying dividends in 1988, and has repurchased stock on and off over the years, though both accelerated under Tim Cook. 

Blizzard

flydog said:

You are wrong. Apple began paying dividends in 1988, and has repurchased stock on and off over the years, though both accelerated under Tim Cook. 

Steve Jobs was no longer at Apple in 1988.  He left in 1985.

retrogusto

flydog said:

JWSC said:

I’m waiting for the ‘innumerati’ to chime in on how share buybacks are like throwing money in the fireplace. 😆

Buybacks help increase stock price assuming PEs remain constant.  But during a recession share buybacks are indeed much like throwing money in a fireplace since PEs generally contract. Also the only way to cash in on a buyback is to sell stock, which brings worse tax consequences compared to dividends.  

It would be much better if Apple distributed part or all of the $90 billion as dividends, which right now are a paltry .5%. 

Another way of looking at it is that buybacks increase a stock’s intrinsic value (because you own a larger portion of the company and its assets) whereas dividends decrease a stock’s intrinsic value, because they distribute a portion of the stock’s value directly to shareholders as cash. Each has its merits, depending on the shareholder’s individual situation. Sometimes you just want the cash. And of course, you could always use that cash to buy more shares, which is similar to the effect of a buyback, but you’ll pay tax on the cash first. A buyback is more like pre-tax reinvestment. 

Are you sure that taxes are higher for capital gains than for dividends? That was not my understanding, at least in the U.S. for shares held long-term.

retrogusto

On a separate note, I’m glad they raised the dividend, but unfortunately it’s still not keeping pace with inflation at its current rate.

cg27

That $90B could buy Netflix outright, or approximately half of Disney as DIS keeps falling.  Not suggesting either is the right move but if Apple were looking to acquire DIS and willing to risk further associating with the Woke side right about now would be the time.  

davidw

retrogusto said:

flydog said:

JWSC said:

I’m waiting for the ‘innumerati’ to chime in on how share buybacks are like throwing money in the fireplace. ߘ榬t;/div>

Buybacks help increase stock price assuming PEs remain constant.  But during a recession share buybacks are indeed much like throwing money in a fireplace since PEs generally contract. Also the only way to cash in on a buyback is to sell stock, which brings worse tax consequences compared to dividends.  

It would be much better if Apple distributed part or all of the $90 billion as dividends, which right now are a paltry .5%. 

Another way of looking at it is that buybacks increase a stock’s intrinsic value (because you own a larger portion of the company and its assets) whereas dividends decrease a stock’s intrinsic value, because they distribute a portion of the stock’s value directly to shareholders as cash. Each has its merits, depending on the shareholder’s individual situation. Sometimes you just want the cash. And of course, you could always use that cash to buy more shares, which is similar to the effect of a buyback, but you’ll pay tax on the cash first. A buyback is more like pre-tax reinvestment. 

Are you sure that taxes are higher for capital gains than for dividends? That was not my understanding, at least in the U.S. for shares held long-term.

It's not the tax rates for long term capital gains and "qualify" dividends that are different, it's that in order for dividend to be considered "qualify dividend" (along with requirements the corporation must meet), one only has to own the stock for a least 60 days. Where as with long term capital gains, one has to own the stock for at least one year, (before the sale).

e.g. ..... if one buys a stock 30 days before the ex-dividend date, then one has to hold on to that stock for another 30 days afterwards, before that dividend is taxed as "qualify dividend" at the lower long term capital gains rate. Otherwise, if one were to sell that stock after owning it for less than 60 days, that dividend is "ordinary dividend" and taxed as ordinary income.

This prevent traders from buying a stock with a high dividend yield, the day before the ex-dividend date, collect the dividend, then sell the stock as soon as possible  afterwards, at above or near the purchase price and end up paying the lower long term capital gains tax rates on that dividend, which is the trader's main profit in the transaction. The lower tax rates for long term capital gains and qualify dividends, are geared toward "investors", not "traders".  

davidw

flydog said:

delreyjones said:

JWSC said:

I’m waiting for the ‘innumerati’ to chime in on how share buybacks are like throwing money in the fireplace. ߘ榬t;/div>

Correct me if I’m wrong, but I don’t believe buy backs or dividends ever happened when Jobs was in charge.  He said he wanted to “keep his powder dry”.  Was Jobs innumerate?

You are wrong. Apple began paying dividends in 1988, and has repurchased stock on and off over the years, though both accelerated under Tim Cook. 

AAPL dividend began in 1987 (2 years after Jobs left)  and ended in 1995 (3 years before he returned). Been an investor in AAPL since Jobs return in 1998 and never got a penny in dividend, until Cook in 2012.

As for buy backs, I have no doubt that Apple have been buying back their stocks since they IPOed. But not because they needed to get rid of excess cash on hand or in significant quantity to make it newsworthy. Many companies that offer options and RSU as part of their salary package for employees, buy back certain amount of their stocks for this purpose. This prevent the dilutions of outstanding shares when stocks are issued as a part of employees pay package. 

Apple is said to retire the shares they buy back. But I'm sure some are put back into treasury, to be re-issued to employees as part of their pay packages. Otherwise, the  millions of new AAPL shares that they need to issue to their employees every year, will end up diluting the outstanding shares over time. This has the affect of lowering earnings per share (EPS).  

cia

davidw said:
As for buy backs, I have no doubt that Apple have been buying back their stocks since they IPOed. But not because they needed to get rid of excess cash on hand or in significant quantity to make it newsworthy. Many companies that offer options and RSU as part of their salary package for employees, buy back certain amount of their stocks for this purpose. This prevent the dilutions of outstanding shares when stocks are issued as a part of employees pay package.
Apple is said to retire the shares they buy back. But I'm sure some are put back into treasury, to be re-issued to employees as part of their pay packages. Otherwise, the  millions of new AAPL shares that they need to issue to their employees every year, will end up diluting the outstanding shares over time. This has the affect of lowering earnings per share (EPS).  

If you listen to the earnings calls, they retire the shares bought back.

Also the number of shares was continually increasing until the buybacks started in 2012.  They were not keeping things even.  They were issuing new shares and just creating "Shareflation".  The buybacks are a good thing.
 
Here's a good link for share totals:  https://www.sharesoutstandinghistory.com/aapl/

eightzero

lkrupp said:

My IRA thanks you, AAPL. Good job, Mr. Cook and company. 

well...that didn't age well....

crowley

I'd say it was a good time time to buy, but it seemed that way last week too, so 

gatorguy

davidw said:

flydog said:

delreyjones said:

JWSC said:

I’m waiting for the ‘innumerati’ to chime in on how share buybacks are like throwing money in the fireplace. ߘ榬t;/div>

Correct me if I’m wrong, but I don’t believe buy backs or dividends ever happened when Jobs was in charge.  He said he wanted to “keep his powder dry”.  Was Jobs innumerate?

You are wrong. Apple began paying dividends in 1988, and has repurchased stock on and off over the years, though both accelerated under Tim Cook. 

Many companies that offer options and RSU as part of their salary package for employees, buy back certain amount of their stocks for this purpose. This prevent the dilutions of outstanding shares when stocks are issued as a part of employees pay package. 

Apple is said to retire the shares they buy back. But I'm sure some are put back into treasury, to be re-issued to employees as part of their pay packages. Otherwise, the  millions of new AAPL shares that they need to issue to their employees every year, will end up diluting the outstanding shares over time. This has the affect of lowering earnings per share (EPS).  

Not a single share of the repurchased stock becomes treasury stock to be given as exec compensation. It is 100% retired.