Friday, February 14, 2014, 12:48 am PT (03:48 am ET)
Apple distributed another $2.6 billion in dividends to shareholders on ThursdayApple paid its shareholders another quarterly dividend on Thursday, although the total payout was reduced by millions due to billions of dollars worth of stock buybacks over recent quarters.
According to the last figures reported by YCharts.com, Apple had 891.99 million outstanding shares in mid January. However, since reporting record earnings in late January, Apple's chief executive Tim Cook announced the company had taken advantage of short term trading panic to buy back $14 billion worth of its own stock.
Following earnings reports, Apple stock tumbled from $550 to slightly below $500 for one week. At those prices, Apple's $14 billion could have bought up an additional 28 million shares, bringing Apple's outstanding share count down toward 860 million shares. Apple shares have since recovered to $544.
After buying back shares, Apple doesn't need to pay dividends for them any more, meaning the most recent buyback trimmed around $85.4 million off the total cost of its total quarterly dividend payment. For the remaining roughly 860 million shares, Apple paid shareholders "of record" by the ex-dividend date last week a $3.05 dividend per share, totaling around $2.6 billion.
Flush with billions in cash it simply can't spend fast enough, Apple first announced plans for a dividend program nearly two years ago in 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 last 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
Cook outlined that Apple's newly expanded buyback and dividend plans would 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 strategy allowed 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 last year.
In 2012, "Apple paid $6B in federal corporate income taxes: 1/40th of all corporate income taxes collected by the US" bloomberg.com/news/2013-05-0...— 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 $10s of billions in buybacks, Apple's cash hoard has grown to more than $158.8 billion by the end of 2013. Apple will continue paying its quarterly dividends about a month and a half after the end of each subsequent quarter, and reevaluate its dividend payments on an annual basis.
Apple's $2.6 billion quarterly dividend payment makes it one of the highest dividend payers in the world.
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