Neil Hughes
Apple will revisit its capital return program in April, and investment firm Piper Jaffray believes the company will use the opportunity to increase both its quarterly dividend payout and share buyback allotment.
Analyst Gene Munster noted this week that in the last two years, Apple increased its dividend by 8 and 11 percent, so he expects the iPhone maker to stay consistent for 2016, anywhere from 5 to 10 percent.
He also believes Apple will add between $30 billion and $50 billion to its share repurchase program, again based on moves the company has made in the last two years. He sees this generating an incremental 5 percent earnings-per-share growth, excluding revenue, in each of the next two years.
In April of 2014, Apple increased its dividend 8 percent to 47 cents per share, while also adding $30 billion to its repurchase program. Then in April 2015, the dividend grew 11 percent to 52 cents per share, while the repurchase program added $50 billion, bringing its total to $140 billion.
As of this January, Apple had $30 billion left on its current share repurchase authorization. It spent $6 billion in the December 2015 quarter alone on share repurchases.
Apple first launched its capital return program in 2012 and has revisited it every year in April. In addition to quarterly dividends, it has sold bonds across the world, raising debt to repurchase its own shares.
The capital return program was initiated as a way for Apple to utilize its massive cash hoard, which has continued to grow even with share buybacks and quarterly dividends. As of last quarter, Apple had nearly $216 billion in cash, most of it held overseas.
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34 Comments
Just slightly at odds with its stock being traded like a junk bond, no?
Presumably, had Apple not been doing all these buybacks, the stock price would be even lower now? This notwithstanding, surely long-term investors would be better off if Apple spent all the capital return money on dividends?
Hoarding wealth is not necessary for Apple at this point - they have massive reserves and are making money faster than they can spend it. Returning money to investors is the right thing to do in this situation but I’m not sure the buyback is good value for money.
I want 0,60 per share. Is a practical issue, my government takes 20% of what is left after yours take a 15% so I want to get 1.000€ net consistently even if there are some swings in exchange rates. In theory, I can claim US government the tax, but in real terms, unless I was getting several times more money per quarter the bank fees takes all the money.
With 0,60 I have certain security that my 1.000€ net could be a reality. With 0,52 I have been getting little bit over 900€ three of the last four quarters, except the last one that the dollar has started to slide again against the Euro.
Although $216 billion in cash is amazingly awesome, Apple has also accumulated an increasing amount of debt. Does anyone have that [debt] figure?
The headline caused a double take. It read like Apple was going to increase the dividend TO 10% not just increase it 10%. Adding another 10% to the dividend is nice but the dividend isn't that high to begin with especially if it were to climb anywhere between 5 and 10% of AAPL's stock value.