Apple is paying its shareholders another quarterly dividend on Thursday, but spending about $110 million less because it has bought back and retired 36 million shares over the June quarter.
Source: Apple
There are now 908.44 million outstanding shares in the company, meaning Apple will be distributing a total of $2.77 billion. Shareholders "of record" by the ex-dividend date last week will be paid $3.05 per share.
Apple's stock buyback program spent $16 billion over the last quarter buying 36 million shares off the market at an average price of $444.44. As of the end of June, Apple still had $44 billion left to invest in itself under the current program over the next two and a half years.
Flush with billions in cash it simply can't spend fast enough, Apple first announced plans for a dividend program a year ago last March, alongside a $10 billion share buyback program. It was the first time the company had paid a dividend in 17 years. Each quarter, the company initially stated it would pay its shareholders a $2.65 per share dividend.
In an earnings conference call earlier this year, the company's chief executive Tim Cook announced that, after paying out more than $10 billion over the previous year in dividends, the company would launch "an aggressive plan that more than doubles the size of the [existing] capital return program."
Cook said "the vast majority of our incremental cash return will be in the form of share repurchases," explaining that "as the Board and management team deliberated among the various alternatives to returning cash, we concluded that investing in Apple was the best. In addition to share repurchases, we are increasing our current dividend by 15% to further appeal to investors seeking yield."
He added, "while we continue to generate cash in excess of our needs to operate the business, invest in our future and maintain flexibility to take advantage of strategic opportunities, we remain firmly committed to our objective of delivering attractive returns to shareholders through both our business performance and the return of capital."
A report by the Dividend Daily stated that Apple's dividend program has attracted new retail investors, noting that "retailer investors are pouring money into tech giant Apple Inc. than ever before."
The report cited consumer-oriented brokerage firm TD Ameritrade as saying that "more of its clients own Apple shares now than at any other point," making Apple shares the second most widely held stock by its clients after General Electric in share count, and by far the most widely held in terms of dollar value.
Can't spend fast enough to make a dent
Over the next three years, Cook outlined that Apple's newly expanded buyback and dividend plans will distribute $100 billion from its cash pile, leveraging debt markets to borrow at very low interest against the company's vast holdings that are mostly held overseas. That allows the company to make use of its stellar credit rating and avoid massive taxes that would be triggered if it were to simply shift cash earned internationally into the U.S.
While this has triggered reports vilifying Apple for "avoiding" taxes, the company is actually "one of the top corporate income tax payers in the country, if not the largest," notes Steve Dowling, Apple's head of public relations.
In 2012, Apple paid $6 billion in federal corporate income taxes, which amounts to 1 out of every 40 dollars in corporate income taxes collected by the U.S. government Dowling told Bloomberg.
In 2012, "Apple paid $6B in federal corporate income taxes: 1/40th of all corporate income taxes collected by the US" bloomberg.com/news/2013-05-0â¦
â Daniel Eran Dilger (@DanielEran) May 3, 2013
Apple continues to earn new cash faster than it is paying out in dividends and stock buybacks; even with its $10 billion in quarterly dividend payments over the past year and $10 billion in buybacks, Apple's cash hoard has grown to more than $146.6 billion by the end of June, the company's third fiscal quarter. Apple will continue paying the now slightly higher quarterly dividends about a month and a half after the end of each subsequent quarter, and reevaluate its dividend payments on an annual basis.
A dividend equivalent will also be paid to holders of Apple's restricted shares, although Cook declined to collect dividend payments for the 1.125 million shares of restricted stock he has been granted, which would otherwise be worth over $75 million.
The company's current dividend payment rate is quite modest when compared to its current and future cash position. At the same time, Apple's nearly $3 billion in quarterly dividend payments makes it one of the highest dividend payers in the world.
25 Comments
Like I said before, Apple is already paying enough in buybacks and dividends. It need to find other used of its cash that could help innovation and EPS growth.
[quote name="herbapou" url="/t/159057/apple-inc-to-distribute-another-2-77-billion-in-dividends-to-shareholders-thursday#post_2380615"]Like I said before, Apple is already paying enough in buybacks and dividends. It need to find other used of its cash that could help innovation and EPS growth.[/quote] Agreed but think Apple should do all the buy back now while stock price still under $500 and reap the benefit of not paying dividends on those shares immediately
I happen to like those dividends and now that I'm getting them, I'd hate to give them up. Those dividends are the only guarantee I'll get anything from owning Apple considering Wall Street's perception Apple being doomed due to loss of smartphone market share. After seeing Apple go from $700 to $400 I just can't depend on Wall Street to value Apple fairly while it gives free passes to stocks like Amazon and Google. However, instead of share repurchases I'd certainly like to see Apple get into some other business unrelated to hardware. Wall Street continues to harp about Apple's falling hardware profit margins and asking a hardware company to stay above 40% profit margins is just downright unfair. So, I'm hoping Apple can get into something like media content or cloud services. Apple should be able to afford the best servers in the world and should easily be able to hire experienced staff to maintain it. If Amazon can do it, why not Apple? Wall Street is always bragging about Amazon's AWS Cloud services, so why doesn't Apple set up one of its own. It would seem to be a good side business and supposedly it's rather profitable for Amazon. Apple could just take $5 billion or so and set up cloud services and get a few long-term contracts. That would be better than just letting the money sit in a bank collecting dust.
If Apple wanted to push their sales (and their profits) through the roof all they'd have to do is throw back a single percent of what they've collected through iTunes to every open iTunes account. if they do it as a credit to the account, you know it would be re-spent with iTunes along with a huge... Huge PR boost. Suddenly, apple would lose their "greedy" label and millions of people would feel Santa just rode into town.
Hello, Tally!
Where are your personal insults?
"shut up and go away" is kind of lame, don't you think, Tally-boy?
Ah I see, the admins of this site now keep you on a tight leash...
KOREA fighting!