Apple Inc. shares reach ex-dividend as it gears up to distribute $2.9 billion to shareholders

Posted:
in AAPL Investors
On May 12, Apple will pay shareholders of record a quarterly dividend of $0.57 per share, but investors must have had settled ownership of the company's stock by Monday May 9 in order to qualify. Apple will pay out $2.9 billion in dividends on its outstanding shares for the quarter.

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 eighth 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, which Apple subsequently increased last year to 52 cents.

May's dividend will be the first 57 cent dividend Apple has paid since it announced plans to increase its dividend from 52 cents during its Q2 2016 earnings conference call.

Over the past four quarters, Apple has paid out around $12 billion in dividends to its shareholders, distributing close to $3 billion every quarter, although that number has decreased slightly in tandem with the company's stock buybacks.

AAPL 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.

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 $37 billion worth of its stock off the market or via accelerated repurchase programs, with $7 billion of that spent in the most recent quarter ending in March.


Capital Return AAPL Q2 2016


In total, Apple has spent $117 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."

This happened again last summer after Apple announced record earnings in June but market players raised the fearsome prospect of weak sales in China. Apple's shares again tanked, enabling the company to opportunistically snatch up $14 billion of its own shares at what was then the lowest point in 2015.

Apple subsequently announced blockbuster earnings for the holiday Q4, particularly in China where revenue nearly doubled and iPhone sales grew by 87 percent in a market that only grew by 4 percent (meaning that outside of Apple, the market for smartphones had actually contracted). Apple also guided for growth higher than analysts were expecting. That correction in intelligence sent Apple's stock up a relatively meager few percent, followed by a massive collapse resulting from new rumors of supplier cuts that were interpreted as representing a massive decline in iPhone demand.

However, those rumors did not materialize in Q1 results. Instead, Apple provided guidance for Q2 to indicate a much smaller decline year over year than the rumors had anticipated. Even so, Apple's shares have continued to fall to levels not seen since the summer of 2014, before iPhone 6--the most popular and massively successful computing device ever sold--appeared.

Against earlier predictions, iPhone 6s similar sales in the winter quarter, while Apple's valuation returned to the days of iPhone 5/5s. Over the March quarter, Apple's global sales of iPhones, iPad and Macs were all lower than the year ago quarter, with the company attributed to a difficult economic climate and very unfavorable exchange rates across most of its international regions.

Combined with dividend payments and net share settlements, Apple has spent about $163 billion on capital return since mid 2012; it plans to return a total of $250 billion over the next six quarters. That means Apple has nearly $65 billion already allocated to spend on buying back its stock at today's extremely low prices.

AAPL Buyback History



Prior to its 2014 stock split, Apple spent about $50 billion buying back shares at prices ranging from around $50 to $90. Since the stock split, Apple has repurchased shares at prices from $100 to $130 per share, significantly higher than the current stock price hovering around $93--indicating that Apple expects its stock to recover and appreciate to much higher levels; it just increased its buyback program again.Apple expects its stock to recover and appreciate to much higher levels

Those post-split buybacks include a surprising $17 billion of its own stock in the September 2014 quarter; $5 billion of stock in open market purchases during its December 2014 quarter (Apple's Fiscal Q1 2015); another $7 billion of stock in open market purchases during its March quarter (Apple's Fiscal Q2 2015); another $4 billion of stock in open market purchases and $6 billion in Accelerated Share Repurchase in the June quarter (Apple's Fiscal Q3 2015); followed by an astounding $14 billion of stock in open market purchases in the September quarter (Apple's Fiscal Q4 2015) and 6.9 billion in the most recent December quarter.

The relatively conservative (for Apple) $6.9 billion spent on buybacks in the December quarter and $7 billion spent during the March quarter suggests that the company hesitated to buy up large numbers of shares, and instead reserved its allocated buyback funds to spend in the current quarter instead, in anticipation of much lower stock prices.

As of April 8, 2016, the company now has 5.477 billion shares outstanding.

Apple shares outstanding Q2 2016. Source: YCharts.com


Since the start of 2014, Apple shares are up 16.6 percent, compared to Microsoft's 36.6 percent gain or Google's 29.3 percent gain in nonvoting GOOG C class shares and 32.1 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.

Since the beginning of 2015, Apple shares are down 20.72 percent, compared to Microsoft's 345.2 percent gain or Google's 35.2 percent gain in nonvoting GOOG C class shares and 36.5 percent gain in standard GOOGL A class shares.





Despite massive buybacks, Apple still has a growing pile of cash



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 $209 billion of its total $233 billion in 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.

In October 2013, after four months of investigation of Apple's foreign earnings and taxes, the U.S. Securities and Exchange Commission ended its inquiry without plans to take any further action after finding no evidence of wrongdoing by the company.

Investors generally view cash as bad for companies to hoard (due to low returns from conservative investments), but Apple can't currently distribute more cash to shareholders without incurring a substantial U.S. tax penalty.

That has made Apple's vast cash holdings a convenient problem to have, because it enables the company to borrow at interest rates very close to zero for domestic investment and capital returns to shareholders while still maintaining vast market power to make long term component deals and strategic investments ranging from acquisitions to expansions of its retail network and its production capabilities.

Apple reported that it expects to invest $15 billion in infrastructure, tooling, retail and other capital expenditures in fiscal 2016.
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Comments

  • Reply 1 of 37
    stompystompy Posts: 390member
    ... but investors must have had settled ownership of the company's stock by Monday May 9 in order to qualify.
    This is incorrect. Again. I guess the good news is this only happens once per quarter. ;)

    Apple gets the list of registered owners on the record date and pays them a dividend.
    AI, you're confused because it takes a transaction 3 business days to settle (in this case, to become the registered owner).

    buy
    before ex-dividend + hold at least until ex-dividend arrives = dividends
    edited May 2016
  • Reply 2 of 37
    schlackschlack Posts: 711member
    Would be cool if Apple would push that $$ used for share buyback into dividends instead. I know buybacks keep the stock price stable/up, but having a 5-6% dividend would probably do the same if not more.
    jony0cnocbui
  • Reply 3 of 37
    I skimmed the article since I knew plenty, but wanted to add that during the last call Apple said it was committed to annual dividend increases going forward. So, I imagine a $0.62 dividend this time next year, which would be $2.48 annually. That would then make it a 2.6% yield, if the share price were to remain unchanged this time next year. I am happy with that, since I have been long-AAPL for a while. I imagine the stock going up at least somewhat a year from now. My expectations are tempered due to Wall Street being full of haters.
    edited May 2016 baconstang
  • Reply 4 of 37
    The dividends are indeed nice, but recently my overall losses in Apple have been far higher than any dividends I have received over the years. Fortunately, I'm still well ahead in financial gains but Apple's recent losses are downright puzzling and disappointing. Other tech companies are adjusting their revenue tactics but not Apple. I'm not looking for huge share gains, but Tim Cook is really letting Apple's overall stock value fall by the wayside just so he can give Neil Patrick Harris some highly-paid Apple air-time.
    ac1234anantksundaramlatifbp
  • Reply 5 of 37
    isteelersisteelers Posts: 738member
    At current prices Apple should be gobbling up outstanding shares unless there is some regulatory restrictions. Take advantage of Wall-Street's negatively. 
    ValueAnalystlatifbptmay
  • Reply 6 of 37
    I skimmed the article since I knew plenty, but wanted to add that during the last call Apple said it was committed to annual dividend increases going forward. So, I imagine a $0.62 dividend this time next year, which would be $2.48 annually. That would then make it a 2.6% yield, if the share price were to remain unchanged this time next year. I am happy with that, since I have been long-AAPL for a while. I imagine the stock going up at least somewhat a year from now. My expectations are tempered due to Wall Street being full of haters.
    What's really kind of sad is that they're now calling Amazon ($703) to be a $3 trillion company within 10 years and just think a couple of years back Apple was supposed to be the first trillion dollar company and look where it is today.  Barely worth half a trillion dollars and falling fast.  It's very likely Amazon will at least become a trillion dollar company while Apple's stock price continues to fall.  Thanks to Jeff Bezos planning for the future, his company will continue to expand in all directions.  What is Tim Cook doing?  Still trying to sell more iPhones in a smartphone market that's completely saturated.

    Apple had so much money to expand its revenue base but has done almost nothing with it.  AppleWatch is claimed to be a huge failure (I really don't know).  AppleMusic has certainly fallen short of Apple's hoped for 100 million users.  Investors are buying Amazon ($703) like it is a bargain stock and investors won't touch Apple for under $100 a share.  It's really crazy.  I totally don't understand Wall Street but I'm not a big investor so they're probably much smarter than I am.  I sure wish I could see the distant future as well as those big investors can but it's difficult for me to see past tomorrow.  To me, Apple still seems like a solid company but yet it's become a poisoned investment to most of Wall Street.  Apple's investment competition is just too good.  They're always devising ways to sell themselves to investors while Apple seems to be driving investors away.  It's just downright weird how Apple has fallen so fast and still retains a large and loyal customer base.
    anantksundaramcnocbui
  • Reply 7 of 37
    crowleycrowley Posts: 10,363member
    Buybacks increase the scarcity, and therefore value, of Apple's stock by taking shares off the market and retiring them.
    No no no. Buybacks do not increase the value of remaining shares, they increase the proportional ownership of a smaller pie (due to capital outlay or debt taken on).  Buybacks are in theoretical terms value neutral, and that's why they're only worth doing if the instigators believe the company to be undervalued by the market.
    anantksundarampatchythepirateValueAnalysttmaycnocbui
  • Reply 8 of 37
    Rayz2016Rayz2016 Posts: 6,957member
    I skimmed the article since I knew plenty, but wanted to add that during the last call Apple said it was committed to annual dividend increases going forward. So, I imagine a $0.62 dividend this time next year, which would be $2.48 annually. That would then make it a 2.6% yield, if the share price were to remain unchanged this time next year. I am happy with that, since I have been long-AAPL for a while. I imagine the stock going up at least somewhat a year from now. My expectations are tempered due to Wall Street being full of haters.
    What's really kind of sad is that they're now calling Amazon ($703) to be a $3 trillion company within 10 years and just think a couple of years back Apple was supposed to be the first trillion dollar company and look where it is today.  Barely worth half a trillion dollars and falling fast.  It's very likely Amazon will at least become a trillion dollar company while Apple's stock price continues to fall.  Thanks to Jeff Bezos planning for the future, his company will continue to expand in all directions.  What is Tim Cook doing?  Still trying to sell more iPhones in a smartphone market that's completely saturated.

    Apple had so much money to expand its revenue base but has done almost nothing with it.  AppleWatch is claimed to be a huge failure (I really don't know).  AppleMusic has certainly fallen short of Apple's hoped for 100 million users.  Investors are buying Amazon ($703) like it is a bargain stock and investors won't touch Apple for under $100 a share.  It's really crazy.  I totally don't understand Wall Street but I'm not a big investor so they're probably much smarter than I am.  I sure wish I could see the distant future as well as those big investors can but it's difficult for me to see past tomorrow.  To me, Apple still seems like a solid company but yet it's become a poisoned investment to most of Wall Street.  Apple's investment competition is just too good.  They're always devising ways to sell themselves to investors while Apple seems to be driving investors away.  It's just downright weird how Apple has fallen so fast and still retains a large and loyal customer base.
    It could be that Apple's primary concern is serving its customers rather than its investors. Apple's share price has zero impact on the company's ability to deliver. But if their customers vanish…
    baconstangjony0patchythepiratetmaysteveh
  • Reply 9 of 37
    It's really crazy.  I totally don't understand Wall Street but I'm not a big investor so they're probably much smarter than I am.  I sure wish I could see the distant future as well as those big investors can but it's difficult for me to see past tomorrow.  
    You're wrong about those big investors.  They're not so smart.  They're more like drunk, hysterical adolescents

    baconstangjony0patchythepirateRayz2016
  • Reply 10 of 37
    radarthekatradarthekat Posts: 3,526moderator
    There's a very good reason for buybacks and dividends that is rarely mentioned, and that comes from removing unproductive excess cash from the balance sheet. Lets look at Apple, with a $510 billion market cap and about $160 billon of cash and equivalents on the books, net of debt.  A dollar invested in Apple represents about 70 cents invested in the actual operating business, which is where the profits come from, and about 30 cents invested to buy a bit of that cash pile, earning about 1%.  Arguably a less-than-ideal allocation of each invested dollar. 

    So a smart investor wants that cash removed from the books, which would either reduce the market cap of the company or, if the cash isn't being valued at even 1x its value, which could be argued is the case with Apple, removing that cash would leave the market cap where it is, which would then imply a higher earnings multiple against the productive operating side of the business, while also taking shares off the market, which would increase earnings per share going forward.

    And a higher earnings multiple means that as earnings grow in the future, the stock will climb faster.  Carl Icahn must have had all of these effects in mind - more efficient allocation of investor's dollars, increase in earnings multiple against operating business, and reduction in shares netting an increase in earnings per remaining share - when he approached Tim Cook a couple years ago.  He gave up, and I have too, to a large extent.  I hold a lot less Apple than I used to.  Pity.

    patchythepirateRayz2016
  • Reply 11 of 37
    baconstangbaconstang Posts: 906member
    I skimmed the article since I knew plenty, but wanted to add that during the last call Apple said it was committed to annual dividend increases going forward. So, I imagine a $0.62 dividend this time next year, which would be $2.48 annually. That would then make it a 2.6% yield, if the share price were to remain unchanged this time next year. I am happy with that, since I have been long-AAPL for a while. I imagine the stock going up at least somewhat a year from now. My expectations are tempered due to Wall Street being full of haters.
    What's really kind of sad is that they're now calling Amazon ($703) to be a $3 trillion company within 10 years and just think a couple of years back Apple was supposed to be the first trillion dollar company and look where it is today.  Barely worth half a trillion dollars and falling fast.  It's very likely Amazon will at least become a trillion dollar company while Apple's stock price continues to fall.  Thanks to Jeff Bezos planning for the future, his company will continue to expand in all directions.  What is Tim Cook doing?  Still trying to sell more iPhones in a smartphone market that's completely saturated.

    Apple had so much money to expand its revenue base but has done almost nothing with it.  AppleWatch is claimed to be a huge failure (I really don't know).  AppleMusic has certainly fallen short of Apple's hoped for 100 million users.  Investors are buying Amazon ($703) like it is a bargain stock and investors won't touch Apple for under $100 a share.  It's really crazy.  I totally don't understand Wall Street but I'm not a big investor so they're probably much smarter than I am.  I sure wish I could see the distant future as well as those big investors can but it's difficult for me to see past tomorrow.  To me, Apple still seems like a solid company but yet it's become a poisoned investment to most of Wall Street.  Apple's investment competition is just too good.  They're always devising ways to sell themselves to investors while Apple seems to be driving investors away.  It's just downright weird how Apple has fallen so fast and still retains a large and loyal customer base.
    Basically, you're conflating Apple with AAPL.  Two different things, with two different goals.
    domino67
  • Reply 12 of 37
    jonljonl Posts: 210member
    stompy said:
    ... but investors must have had settled ownership of the company's stock by Monday May 9 in order to qualify.
    This is incorrect. Again. I guess the good news is this only happens once per quarter. ;)

    Apple gets the list of registered owners on the record date and pays them a dividend.
    AI, you're confused because it takes a transaction 3 business days to settle (in this case, to become the registered owner).

    buy
    before ex-dividend + hold at least until ex-dividend arrives = dividends
    The part you quoted is sort of correct, but you're right, it's again an overall inaccurate, misleading article, but good for a quarterly lol. I say "sort of" because it implies investors have to actively "settle ownership," which is wrong.

    Here's the deal. AAPL went  ex-dividend on May 5. You needed to have owned the stock through the end of May 4 to collect the dividend. People who purchased the stock on May 5 were excluded from the dividend, hence the term, "ex-dividend". Those who were eligible for the dividend were free to sell it on May 5; they will still get the dividend.

    To be fair, Apple itself reports only the settlement date, not the ex-dividend date, which is rather stupid, because you have to get out a calendar, count backwards, and account for weekends and holidays to turn it into usable information.

    http://investor.apple.com/dividends.cfm

    Still no excuse for AI to incorrectly use the term "ex-dividend" quarter after quarter in these articles.
    radarthekatSpamSandwich
  • Reply 13 of 37
    jonljonl Posts: 210member
    Rayz2016 said:

    It could be that Apple's primary concern is serving its customers rather than its investors. Apple's share price has zero impact on the company's ability to deliver. But if their customers vanish…
    Wrong. The stock price matters greatly to employees whose compensation is (partly) in the form of stock.

    delreyjones
  • Reply 14 of 37
    ac1234ac1234 Posts: 138member
    isteelers said:
    At current prices Apple should be gobbling up outstanding shares unless there is some regulatory restrictions. Take advantage of Wall-Street's negatively. 
    And why do you think they should be doing that?  So far it has been a huge waste of money / shareholder value

    cnocbui
  • Reply 15 of 37
    ac1234ac1234 Posts: 138member

    jonl said:
    Rayz2016 said:

    It could be that Apple's primary concern is serving its customers rather than its investors. Apple's share price has zero impact on the company's ability to deliver. But if their customers vanish…
    Wrong. The stock price matters greatly to employees whose compensation is (partly) in the form of stock.

    Simply put - on a sustainable basis you delight customers with "magical" producte, manage costs and that generates profits and Wall Street responds.
    baconstangtmay
  • Reply 16 of 37
    ac1234ac1234 Posts: 138member

    I skimmed the article since ....
      To me, Apple still seems like a solid company but yet it's become a poisoned investment to most of Wall Street.  Apple's investment competition is just too good.  They're always devising ways to sell themselves to investors while Apple seems to be driving investors away.  It's just downright weird how Apple has fallen so fast and still retains a large and loyal customer base.
    Perhaps they are taking that loyal customer for granted....
  • Reply 17 of 37
    radarthekatradarthekat Posts: 3,526moderator
    jonl said:
    stompy said:
    This is incorrect. Again. I guess the good news is this only happens once per quarter. ;)

    Apple gets the list of registered owners on the record date and pays them a dividend.
    AI, you're confused because it takes a transaction 3 business days to settle (in this case, to become the registered owner).

    buy
    before ex-dividend + hold at least until ex-dividend arrives = dividends
    The part you quoted is sort of correct, but you're right, it's again an overall inaccurate, misleading article, but good for a quarterly lol. I say "sort of" because it implies investors have to actively "settle ownership," which is wrong.

    Here's the deal. AAPL went  ex-dividend on May 5. You needed to have owned the stock through the end of May 4 to collect the dividend. People who purchased the stock on May 5 were excluded from the dividend, hence the term, "ex-dividend". Those who were eligible for the dividend were free to sell it on May 5; they will still get the dividend.

    To be fair, Apple itself reports only the settlement date, not the ex-dividend date, which is rather stupid, because you have to get out a calendar, count backwards, and account for weekends and holidays to turn it into usable information.

    http://investor.apple.com/dividends.cfm

    Still no excuse for AI to incorrectly use the term "ex-dividend" quarter after quarter in these articles.

    Perfectly stated.  Frustrating to see AI report this every quarter several days after the stock has gone ex-dividend.  It would be a better service to readers to write this article a few days prior to ex-dividend.  That would at least be of value to those readers who aren't certain on the matter, though I suspect the only ones not certain as to the ex-dividend date are those working at AI.  A simple google search for any stock's ex-dividend date turns up all the info needed, usually linking to Nasdaq.com (for Nasdaq listed shares, like Apple's.  Maybe next quarter.  
    SpamSandwich
  • Reply 18 of 37
    domino67domino67 Posts: 34member
    I skimmed the article since I knew plenty, but wanted to add that during the last call Apple said it was committed to annual dividend increases going forward. So, I imagine a $0.62 dividend this time next year, which would be $2.48 annually. That would then make it a 2.6% yield, if the share price were to remain unchanged this time next year. I am happy with that, since I have been long-AAPL for a while. I imagine the stock going up at least somewhat a year from now. My expectations are tempered due to Wall Street being full of haters.
    What's really kind of sad is that they're now calling Amazon ($703) to be a $3 trillion company within 10 years and just think a couple of years back Apple was supposed to be the first trillion dollar company and look where it is today.  Barely worth half a trillion dollars and falling fast.  It's very likely Amazon will at least become a trillion dollar company while Apple's stock price continues to fall.  Thanks to Jeff Bezos planning for the future, his company will continue to expand in all directions.  What is Tim Cook doing?  Still trying to sell more iPhones in a smartphone market that's completely saturated.

    Apple had so much money to expand its revenue base but has done almost nothing with it.  AppleWatch is claimed to be a huge failure (I really don't know).  AppleMusic has certainly fallen short of Apple's hoped for 100 million users.  Investors are buying Amazon ($703) like it is a bargain stock and investors won't touch Apple for under $100 a share.  It's really crazy.  I totally don't understand Wall Street but I'm not a big investor so they're probably much smarter than I am.  I sure wish I could see the distant future as well as those big investors can but it's difficult for me to see past tomorrow.  To me, Apple still seems like a solid company but yet it's become a poisoned investment to most of Wall Street.  Apple's investment competition is just too good.  They're always devising ways to sell themselves to investors while Apple seems to be driving investors away.  It's just downright weird how Apple has fallen so fast and still retains a large and loyal customer base.
    Actually PetroChina was the first company to be valued at 1 trillion.
  • Reply 19 of 37
    isteelers said:
    At current prices Apple should be gobbling up outstanding shares unless there is some regulatory restrictions. Take advantage of Wall-Street's negatively. 
    If the 2.9B number paid for dividends is correct then they have been buying A LOT.  In order to get below 3B there would have to be 5.25B shares outstanding.  Currently we have 5.477B shares outstanding.  Simple math tells me that is a difference of about 220M shares.  They have been busy little bees IF AI was correct about the amount distributed.

    My guess though is that AI just took the number from last quarter and assumed it would be the same without factoring in the increase.  Which is a disappointment.
    edited May 2016
  • Reply 20 of 37
    tkell31tkell31 Posts: 216member
    jonl said:
    stompy said:
    This is incorrect. Again. I guess the good news is this only happens once per quarter. ;)

    Apple gets the list of registered owners on the record date and pays them a dividend.
    AI, you're confused because it takes a transaction 3 business days to settle (in this case, to become the registered owner).

    buy
    before ex-dividend + hold at least until ex-dividend arrives = dividends
    The part you quoted is sort of correct, but you're right, it's again an overall inaccurate, misleading article, but good for a quarterly lol. I say "sort of" because it implies investors have to actively "settle ownership," which is wrong.

    Here's the deal. AAPL went  ex-dividend on May 5. You needed to have owned the stock through the end of May 4 to collect the dividend. People who purchased the stock on May 5 were excluded from the dividend, hence the term, "ex-dividend". Those who were eligible for the dividend were free to sell it on May 5; they will still get the dividend.

    To be fair, Apple itself reports only the settlement date, not the ex-dividend date, which is rather stupid, because you have to get out a calendar, count backwards, and account for weekends and holidays to turn it into usable information.

    http://investor.apple.com/dividends.cfm

    Still no excuse for AI to incorrectly use the term "ex-dividend" quarter after quarter in these articles.
    It takes about 5 seconds to google Apple's ex date.  Why you would get a calendar and count backward is bizarre.
    anantksundaram
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