Apple Dividend Is Finally Here
Apple announced today that the world’s largest company will initiate a quarterly dividend of $2.65 per share beginning this summer.
Apple’s dividend yield will be approximately 1.8 percent based on their closing stock price on Friday.
The company also announced a $10 billion stock repurchase program that will begin on September 30, 2012. The stock repurchases will take place over the next three years and represents less than 2 percent of Apple’s $546 billion market cap.
Apple CEO Tim Cook commented in a press release, “We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future. Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program.”
Today’s Apple dividend announcement has been widely speculated on for some time with CEO Tim Cook hinting at an Apple dividend as recently as last month. After all, Apple has approximately $98 billion in cash on their balance sheet with more accumulating each quarter. Last quarter alone Apple generated $17.5 billion in operating cash flow.
Today’s Apple dividend news could be a further boon to their stock price, despite the fact that the company has already gained nearly 45 percent since the beginning of the year. Now that the tech giant is also a dividend payer, this opens their stock up for purchase by dividend mutual funds and dividend ETF’s. This could lead to significant buying demand for Apple stock in the coming months.
Apple investors should also be excited about the prospect of future dividend increases as well. The initial Apple dividend rate is only $10.60 per year or less than 22 percent of consensus 2013 earnings. With the company’s strong growth prospects, Apple could be a strong dividend growth stock for years to come.
The company did not provide a specific date for when the first Apple dividend will be paid out. However, the company said it will come in their fiscal fourth quarter which begins July 1, 2012. We would expect the dividend announcement will be linked with their third quarter earnings release on or about July 17th.