LOS ANGELES, CA (Catholic Online) - in addition, Apple will also buy back $10 billion of its own shares over three years, beginning in October.

"We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure," Apple CEO Tim Cook said in a prepared statement.

"Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program," he added.

While the amount of cash Apple plans to return to investors is large, it's relatively small compared to its share price, amounting to a 1.8 percent annual yield on Apple's stock. This puts Apple at the low end of its peers in the technology world, Mike Abramsky, an analyst at RBC Capital Markets says. In comparison, Microsoft pays a 2.5 percent dividend, Intel pays a three percent dividend and Hewlett-Packard pays a two percent dividend.

Stock repurchases help companies increase their earnings per share because it reduces the number of shares outstanding. It must be noted that Apple has had no difficulties with profit growth, routinely blowing past Wall Street analysts' quarterly earnings forecasts.

Apple said the share buybacks will help prevent earnings-per-share dilution from future employee stock grants and purchase programs.

Apple says it expects the dividend to cost the company $2.5 billion per quarter, making it one of the largest dividend payers in the U.S. Combined with the repurchase program, Apple said it will likely utilize $45 billion of its domestic cash through 2015.

It's highly notable that Apple is using its domestic cash, rather than the much heftier stockpiles it holds overseas, as foreign cash would be subject to a sizable "repatriation tax" if brought back into the U.S. Cook said the company didn't want to pay that tax.

Growth at Apple has never been a problem. During the holiday season it posted the second-most profitable quarter by any corporation in U.S. history.

Apple is still actively looking for new investors. Some fund managers have since ceased buying shares as Apple's stock price has soared. But many funds require a dividend from the stocks they invest in, so they have had to stay away from Apple.

"Investors have been wresting with the question of, 'Who is left to buy the stock?'" Alex Gauna, tech analyst at JMP Securities says.

Cook says he hopes the dividend will open up Apple's stock to a new investor base.
 
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