Apple's dividend - how it compares

Plan for $US100 billion cash pile includes a share buyback and "not exceptional" quarterly dividend.

APPLE'S $US100b CASH PILE PLAN

  • $US2.65 per share quarterly dividend
  • Equates to about $US10.65 annual dividend, or 1.8% yield
  • $US10b share buyback over three years

WHERE IT FITS: SELECTED TECH STOCK YIELDS

  • Telecom NZ: 7.3%
  • AT&T: 5.61%
  • Verizon 5.09%
  • Intel: 3.03%
  • Microsoft: 2.42%
  • HP 2.01%.
  • Apple’s 1.81%
  • IBM: 1.5%
  • Cisco: 0.9%
  • Oracle: 0.8%

Source: S&P CapitalIQ


This morning NZ time, Apple CEO Tim Cook and CFO Peter Oppenheimer finally revealed his company's plans for its ever-growing cash pile - which stands at around $US100 billion.

The company will buy back $US10 billion of its stock over three years, and start paying a quarterly dividend of $2.65 a share in its fiscal fourth quarter, which begins July 1.

Apple shares [NAS:AAPL] - which have already nearly doubled over the past year and hit and all-time high of $US600.01 last week  - climbed 2.65% to $601.10 on the news.

How it compares
Assuming it keeps its quarterly payouts at the same level, Apple will pay around $US10.60 per year in dividends per share, or a yield of around 1.81%.

The Wall Street Journal immediately sniffed that "Apple’s 1.81% dividend yield is hardly exceptional" compared to other blue chip techs.

Intel yields 3.03%, Microsoft 2.42%, and HP 2.01%.

Tech companies have historically been seen as growth stocks, and spurned paying a dividend.

Many, including Google and Amazon, still don't.

The highest paying have always been phone companies, looking to keep investors loyal as they grapple with the lows of traditional markets.

Another factor: some blue chip techs have started relatively low, giving themselves room to increase yield over time. Microsoft, for example, has more than doubled its dividend since it was introduced in 2004.

The dividend will cost Apple around $US9.88 billion a year.

The $US10 billion share buy-back will begin in the company's 2013 financial year, which starts on September 30, 2012.

"The repurchase program is expected to be executed over three years, with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs," the company said in a statement.

Doors not closed
“These decisions will not close any doors for us,” Apple CEO Tim Cook said on a conference call.

Mr Cook did not announce any specific acquisition, product or R&D plans.

But assuming its new dividend and buyback plan cost it around $US13 billion a year, that still leaves a lot in the kitty - especially when you consider the company generated $US17.5 billion free cash flow during its December quarter, and a net profit of $US13.06 billion over the three-month period.

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