Apple shares approach ex-dividend as it gears up to distribute $3 billion to shareholders

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On November 12, 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 Thursday November 5 in order to qualify.

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 November dividend will be the sixth 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.

It will be the third 52 cent dividend Apple has paid since it announced plans to increase its dividend from 47 cents during its Q2 earnings conference call.

Since the stock split, Apple repurchased a surprising $17 billion of its own stock in the year-ago September quarter; $5 billion of stock in open market purchases during its December quarter (Apple's Fiscal Q1 2015); another $7 billion of stock in open market purchases during its March quarter (Apple's Fiscal Q2 2015); another $4 billion of stock in open market purchases and $6 billion in Accelerated Share Repurchase in the June quarter (Apple's Fiscal Q3 2015); followed by an astounding $14 billion of stock in open market purchases in the most recent September quarter (Apple's Fiscal Q4 2015).

The company now has 5.575 billion shares outstanding.

Apple shares outstanding Q4 2015
Apple shares outstanding Q4 2015. Source:

Since the beginning of 2014, Apple shares are up 52.47 percent, compared to Microsoft's 45.88 percent gain or Google's 30.33 percent gain in nonvoting GOOG C class shares and 34.92 percent gain in standard GOOGL A class shares.

Since the start of 2015, Apple shares are up 10.53 percent, compared to Microsoft's 27.98 percent gain or Google's 38.32 percent gain in nonvoting GOOG C class shares and 42.32 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 Q4 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 Q4 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 $36 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 has stated in its 10K filing.

Over the past four quarters, Apple has paid out $11.6 billion in dividends to its shareholders, distributing about $3 billion every quarter, although that number has decreased slightly in tandem with the company's stock buybacks.

In total, Apple has spent $104 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."

This happened again this summer after Apple announced record earnings in June but market players raised the fearsome prospect of weak sales in China. Apple's shares again tanked, enabling the company to opportunistically snatch up $14 billion of its own shares at the lowest point of 2015.

Apple has since announced blockbuster earnings for Q4, particularly in China where revenue nearly doubled and iPhone sales grew by 87 percent in a market that only grew by 4 percent (meaning that outside of Apple, the market for smartphones actually contracted). Apple also guided for growth higher than analysts were expecting. That correction in intelligence has since sent Apple's stock up a relatively meager 5.83 percent over the past week, although analysts are targeting a valuation near $148.

Combined with dividend payments and net share settlements, Apple has spent $143.5 billion on capital return since mid 2012, and it plans to return a total of $200 billion over the next year and a half.

Despite massive buybacks, Apple still has a growing pile of cash

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 $186.9 billion of its total $205.666 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.

In October 2013, after four months of investigation of Apple's foreign earnings and taxes, the U.S. Securities and Exchange Commission ended its inquiry without plans to take any further action after finding no evidence of wrongdoing by the company.

Investors generally view cash as bad for companies to hoard (due to low returns from conservative investments), but Apple can't currently distribute more cash to shareholders without incurring a substantial U.S. tax penalty.

That has made Apple's vast cash holdings a convenient problem to have, because it enables the company to borrow at interest rates very close to zero for domestic investment and capital returns to shareholders while still maintaining vast market power to make long term component deals and strategic investments ranging from acquisitions to expansions of its retail network and its production capabilities.

Apple expects to invest $15 billion in infrastructure, tooling, retail and other capital expenditures in fiscal 2016.