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Apple Inc. shares approach ex-dividend as it gears up to distribute $2.7 billion to shareholders

On May 14, Apple will pay shareholders of record a quarterly dividend of $0.52 per share, but investors must have settled ownership of the company's stock by Monday, May 11, in order to qualify.

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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 fourth 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.

Apple just announced plans to increase its May dividend from 47 cents to 52 cents per share during its Q2 earnings conference call.

Since the stock split, Apple repurchased a surprising $17 billion of its own stock in the September quarter; $5 billion of stock in open market purchases during its December quarter (Apple's Fiscal Q1 2015); and another $7 billion of stock in open market purchases during its March quarter (Apple's Fiscal Q2 2015).

The company now has 5.761 billion shares outstanding.

Apple shares outstanding Q2 2015


Since the beginning of 2014, Apple shares are up 59.2 percent, compared to Microsoft's 27.98 percent gain or Google's 3.43 percent decline in nonvoting GOOG C class shares and 1.61 percent loss in standard GOOGL A class shares.

Since the start of 2015, Apple shares are up 16.51 percent, compared to Microsoft's 2.06 percent gain or Google's 2.79 percent gain in nonvoting GOOG C class shares and 4 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.

Apple MSFT GOOG Q2 2015


AAPL Dividends & 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.

Capital Return AAPL Q2 2015



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 $34 billion worth of its stock off the market or via accelerated repurchase programs.

"The Company also plans to increase its dividend on an annual basis, subject to declaration by the Board of Directors," Apple states in its 10-K filing, a comment reiterated by the company in its most recent earnings conference call.

Over the past four quarters, Apple has paid out over $11 billion in dividends to its shareholders, distributing about $2.8 billion every quarter, although that number is decreasingly slightly in tandem with the company's stock buybacks.

Apple's volume of stock buybacks have reached the 5 percent threshold to qualify for inclusion in the "NASDAQ BuyBack Achievers Index," as well as the PowerShares Buyback Achievers Portfolio, as noted in a report by ETFtrends.

In total, Apple has spent $80 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."

Combined with dividend payments and net share settlements, Apple has spent $112.6 billion on capital return since mid 2012, and it plans to return a total of $200 billion over the next two years.

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 $171 billion of its total $194 billion 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.