US-based Apple yesterday announced it would start paying out dividends, the first time it has returned cash to shareholders since 1995.
The company, maker of the popular iPhone and iPad, said it would pay out $2.65 to stockholders every quarter, or $10.60 a year, from “sometime in the fourth quarter”, which starts in July.
It also said it would buy back shares worth $10 billion, a fraction of its more than $500 billion market capitalisation. The share buyback will begin in its new financial year, which starts at the end of September, and will carry on for three years.
In total, the company expects to dish out about $45 billion to stockholders in the next three years.
Cash flush
In its latest results, for the quarter to December, Apple said it turned over $46.33 billion and made a net profit of $13 billion. It generated more than $17.5 billion in cash from operations.
CEO Tim Cook said in a statement yesterday the company has “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.”
CFO Peter Oppenheimer said: “We are extremely confident in our future and see tremendous opportunities ahead.”
Less than Microsoft
Vestact analyst Sasha Naryskine says Apple's dividend yield, at 1.76% based on last night's record closing share price of $601, is lower than Microsoft's, but higher than Cisco's. “To put it into context, when Cisco announced they were paying a modest quarterly dividend of 6c per quarter, the annual yield was around 1.3% at the time.”
Naryskine expects about $35 billion to be used for dividends, but points out that the company has generated about $60 billion in cash over the last two years.
“There was building pressure from stockholders for Apple to do something with their cash,” says Naryskine. He adds that Apple will continue to invest in its business; rolling out retail stores, spending “wild sums” on research and development, building infrastructure and spending on its supply chain.
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