Apple to put billions in money to work
Apple will be offering quarterly dividends for the first time since 1995
Following their massive iPod, iPhone, iPad and Macintosh sales, Apple
has announced plans for much of the $97.6 billion in cash it has since
accumulated. Apple said it would begin giving shareholders a quarterly
dividend of $2.65 per share sometime it's fiscal fourth quarter, which
begins in July. Apple last offered a dividend in 1995.
'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.
"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.
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.
- - -
Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.
Keywords: Apple, dividends, quarterly, stocks
Rate This Article
Leave a Comment
More Business & Economics News
- Web developer: Earn $60,000 a year - without college degree or debt
- China, India, Brazil could dominate global investment by 2030
- Unemployment in U.S. comes roaring back - in a big way
- Criminally unfair? Why disgraced Enron CEO Skilling could see freedom sooner than you think
- Berkshire Hathaway Inc. hits first quarter record profit at 51 percent
- China and Japan now hold record amounts of Obama debt
- Does shift to mobile mean Facebook's salad days are done? Not at all
- U.S. annual growth rate slowest since 1929, start of Great Depression
- Prosperity gap between races in U.S. widened during recession
- Fr. Paul Schenck: Finding Living Faith on Catechetical Sunday
- The Movie Yellow: Incest as 'Normal' and Cassavates's Slides Into the World of Woes
- The Chicago School Teachers Strike Reveals the Need For School Choice
- The Sexual Barbarians and the Dissolution of Culture
- The Happy Priest Challenges Us to Ask: Who is Jesus to Me?
- Michael Coren on Canadian Public Schools: Teachers, leave those kids alone
- We Cannot Ignore Our Consciences: Cardinal Dolan On Religious Liberty
- In the Face of Danger, Successor of Peter Travels to Lebanon as a Messenger of Peace
- Reflections on the Dignity and Vocation of Women: Who or What?
Disclaimer: The columns, articles, advertisers claims and any other features provided on Catholic Online Business & Economics are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author's own and not necessarily those of Catholic Online and there is no implied endorsement by Catholic Online of any advice or trading strategy.