Apple Announces Plans to Initiate Dividend and Share Repurchase Program

[69650]

It's a bit late now. In hindsight, you should have invested that $60,000 a year or two ago.

Unfortunately I didn't have the $60,000 two years ago lol but I agree hindsight is a wonderful thing.

Given a 1.8% return on investment, I wonder if the shares will continue to rise as quickly as they have been doing lately or whether the institutions will cut and run taking their profits in the process.

 

[meagain]

Could anyone explain the $10 billion buyback part of this? What does that actually mean per share to an investor? It's separate from the 2.65 per quarter ($10.60/year) dividend - correct?

 

[Cranman67]

I'm not sure if my maths are correct but...

If I invest $60,000 in Apple stock at $600 a share that gets me 100 shares.

$2.65 per quater dividend equals $10.60 per year per share.

Multiply that by 100 and I would get $1060 in dividends per year.

If I just put the cash in the bank instead at 3% interest I would get $1800.

So I would still need the share price to rise steadily to really make any money on Apple stock.

Depends on the interest rates paid at the banks in the country where you live. In mine rates are so low that you would be lucky to get 1/4% on a typical bank savings account.

Not sure how the US taxes dividends but I believe the dividend is tax free to a US citizen because the dividends come from the after tax profits of the company.

Interest paid by a bank would be taxed. So $1 of dividends is not equal to $1 of interest.

The idea of paying a dividend is a good one. More companies should do it. Although I would rather they let us reinvest the dividend into fractional shares. It is very tough to add to ones position at these prices. Even a stock split would help (for those who don't get what that is - 100shares at $600 becomes 200shares at $300 and the dividend is cut in half as well).

 

[eternlgladiator]

What is this going to do to their stock price and market capitalization? I'm not very fluent in this stuff.

 

[deconstruct60]

Missing one crucial point, AAPL shares are only traded on the US stock market.

Where is the law that you have to be a US resident citizen to buy something on NASDAQ ?

For example, isn't stopping some Australians.....

http://www.theaustralian.com.au/bus...gh-local-brokers/story-e6frg91o-1226301600248


Second.... not pragmatically true that it is solely traded in the US. There are instruments to loop around direct buys even if they aren't available.

In countries where Apple has a physical store, you think those employees are being paid out of a US based bank? That Apple has to pull money out of France back to the US and then push it back again to France to pay the employees?

 

[Cranman67]

Could anyone explain the $10 billion buyback part of this? What does that actually mean per share to an investor? It's separate from the 2.65 per quarter ($10.60/year) dividend - correct?

This will just help keep the share value from dropping when they issue new shares for employees (or when employees exercise an option to buy new shares at a fixed price).

If they were not issuing new shares then repurchasing shares in the market will generally increase the value of the remaining shares. When a company buys its own shares it cancels them so every share remaining owns a little bit more of the company.

 

[xinu]

So are you living in a cave in Finland then? How do you run your computer, solar power perhaps? Who's internet connection are you stealing?

You must be one of these people that can't get a job so he complains about everything that has happened to him and blames it all on corporations.

I've got news for you. Without corporations most of what you have in the world today wouldn't exist.

I think you are just upset that you didn't buy Apple's stock 10 years ago when you could afford 100 shares.

The corps wont give us jobs. The real unemployment rate here is over 20% so it is not in individuals own hands this situation here. Foreigns are making all the labour working for low wages and they wont pay taxes here at all. "Grey-Economy" flourishes.

Now they are telling that food prices go up 10-15% here this year and we are already the most expensive country in the whole world to live. Gasoline is 2 euros per litre. That is 10 dollars / gallon. THANKS.

 

[mrtune]

Wirelessly posted (iPhone: Mozilla/5.0 (iPhone; CPU iPhone OS 5_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9B176 Safari/7534.48.3)

I'm not sure if my maths are correct but...

If I invest $60,000 in Apple stock at $600 a share that gets me 100 shares.

$2.65 per quater dividend equals $10.60 per year per share.

Multiply that by 100 and I would get $1060 in dividends per year.

If I just put the cash in the bank instead at 3% interest I would get $1800.

So I would still need the share price to rise steadily to really make any money on Apple stock.

Depends on the interest rates paid at the banks in the country where you live. In mine rates are so low that you would be lucky to get 1/4% on a typical bank savings account.

Not sure how the US taxes dividends but I believe the dividend is tax free to a US citizen because the dividends come from the after tax profits of the company.

Interest paid by a bank would be taxed. So $1 of dividends is not equal to $1 of interest.

The idea of paying a dividend is a good one. More companies should do it. Although I would rather they let us reinvest the dividend into fractional shares. It is very tough to add to ones position at these prices. Even a stock split would help (for those who don't get what that is - 100shares at $600 becomes 200shares at $300 and the dividend is cut in half as well).

We get taxed on dividends here in the US. Even if we're enrolled in a direct reinvestment program and use the dividends to buy more shares without ever seeing it in the bank.

 

[69650]

Depends on the interest rates paid at the banks in the country where you live. In mine rates are so low that you would be lucky to get 1/4% on a typical bank savings account.

Not sure how the US taxes dividends but I believe the dividend is tax free to a US citizen because the dividends come from the after tax profits of the company.

Interest paid by a bank would be taxed. So $1 of dividends is not equal to $1 of interest.

The idea of paying a dividend is a good one. More companies should do it. Although I would rather they let us reinvest the dividend into fractional shares. It is very tough to add to ones position at these prices. Even a stock split would help (for those who don't get what that is - 100shares at $600 becomes 200shares at $300 and the dividend is cut in half as well).

Interesting, we pay tax on interest earned from dividends in the UK as it's counted as just another form of income. We also pay tax on interest from savings.

I wonder if this is intended to shy away the institutional investors in favour of the ordinary shareholders and the pension funds, who tend to keep the shares for the long term. Maybe Tim is worried that the stock is going through the roof and that any bit of bad news in the future would cause a flight by Wall Street and a sharp decline in the stock price.

 

[meagain]

OK, so the 'buyback' aspect of this means nothing per share to us. I.e.; no extra money. Right? We only get the 10.60 per share yearly.

 

[IJ Reilly]

Dividends are usually paid quarterly. This one will be too for a total of $10.60 per year.

It's $2.65 per quarter. I don't know if they pay it quarterly or annually.

Yes, dividends are typically paid quarterly, but at a stated annual rate. I have heard this dividend reported as either $2.65 annually or quarterly, and the press release wording doesn't help matters.

 

[fithian]

Finland

The corps wont give us jobs. The real unemployment rate here is over 20% so it is not in individuals own hands this situation here. Foreigns are making all the labour working for low wages and they wont pay taxes here at all. "Grey-Economy" flourishes.

Now they are telling that food prices go up 10-15% here this year and we are already the most expensive country in the whole world to live. Gasoline is 2 euros per litre. That is 10 dollars / gallon. THANKS.

OTOH, you have Lilyhammer!

 

[Cranman67]

Where is the law that you have to be a US resident citizen to buy something on NASDAQ ?

For example, isn't stopping some Australians.....

http://www.theaustralian.com.au/bus...gh-local-brokers/story-e6frg91o-1226301600248


Second.... not pragmatically true that it is solely traded in the US. There are instruments to loop around direct buys even if they aren't available.

In countries where Apple has a physical store, you think those employees are being paid out of a US based bank? That Apple has to pull money out of France back to the US and then push it back again to France to pay the employees?

You don't have to be a US citizen to buy on the Nasdaq but you are still buying on the Nasdaq. The shares are settled in the US on a US exchange.

I'm sure that Apple maintains separate corporations in the various countries it does business in. They would all be related and handle their operations locally. But you don't get to buy shares of Apple Canada, for example. You just get to buy shares of Apple (US). Apple (US) owns all the shares of all its subsidiaries.

US tax law is very complex and its grip on US citizens is nuts. If a US citizen moves away from the US and lives in another country that person still has to file a US tax return every year for the rest of their lives. It is that kind of control and high levels of taxation that leads many corporations to not want to repatriate their capital and as a result that costs US citizens jobs at home.

 

[Blay91]

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9B176 Safari/7534.48.3)

Steve never had $100B to play with. They need to do something with the money. This way because of the amount of money they're making they will still grow their cash hoard and have some left over to buy up sharp or a cable company or a movie studio.
Let's wait and see what happens before we judge poor Mr. Cook, he's probably having trouble trying to fill the shoes of Steve, and no doubt he knows Steve's fans don't have much nice to say about him

 

[smithrh]

People:

Hoard != Horde

That is all.

 

[Rocketman]

Unless AAPL changes the dividend rate each quarter, it goes like this:

4Q 2012 2.65/700 = 0.3785%
1Q 2013 2.65/750 = 0.3533%
2Q 2013 2.65/800 = 0.3313%
3Q 2013 2.65/850 = 0.3118%

Annual Dividend = 1.3749%

Since all of my AAPL is in an IRA and I am over 71, the dividend will amount to about half of my Required Minimum Distribution (RMD) before taxes. This means I can keep my shares of AAPL and take the RMD from the dividends.

One of the consequences of issuing a dividend is now AAPL will have a dividend yield. As you point out that yield will drop as share prices rise. AAPL will in effect have a slight price drag from those holders factoring in dividend yield, which was not the case before.

This is why there were questions about increasing dividend plans, which were not responded to.

However I will point out to the average reader that AAPL not only grows at 50-70% per year on capital value, but yields about double what a 5 year treasury note does, with less risk of default, and no risk of principal loss if income increases.

Today's trading also formed a half week wide double top, and if you believe in buy on rumor and sell on news, we had two large news items this week alone. iPad release, dividend and stock buyback announcement. Watch out.

Rocketman

 

[Cranman67]

Yes, dividends are typically paid quarterly, but at a stated annual rate. I have heard this dividend reported as either $2.65 annually or quarterly, and the press release wording doesn't help matters.

I cut the sentence below from the draft of the press release. I'm sticking to my assertion that it is $2.65 per quarter. I guess I'll find out later in the year.

"Subject to a board declaration we plan to initiate a quarterly dividend of $2.65 per share beginning in the September quarter."

 

[SteveJobsUK]

Where is the law that you have to be a US resident citizen to buy something on NASDAQ ?

For example, isn't stopping some Australians.....

http://www.theaustralian.com.au/bus...gh-local-brokers/story-e6frg91o-1226301600248


Second.... not pragmatically true that it is solely traded in the US. There are instruments to loop around direct buys even if they aren't available.

In countries where Apple has a physical store, you think those employees are being paid out of a US based bank? That Apple has to pull money out of France back to the US and then push it back again to France to pay the employees?

You're confusing matters.

The fact of the matter is, the NASDAQ is the only exchange by which AAPL shares qualifying for dividends are sold on. They will have to be purchased through an American broker at some point, eventually they'll get changed into a different currency but at source they can only be paid in dollars. Basics man!

 

[rotorblade69]

Hmmmm.

Hastily Called Weekend press conference??!?!!?!?!?!?!?!?!?
Why not wait until the shareholders conference call.
Buying back stock at an all time HIGH!!!!!???!?!?!?!?!?!?!
Doesn't make sense unless they had to.

In short sales are SOFT. Its the only reason Sales were way off expectations.

Buying back stock is how they will pay executives while the shareholders Nuked.

The tech area reminds me of March 2000

The market is full of HFT and little volume or Liquidity. Don't stand under this or you will be crushed when it falls.

DISCLOSURE: NO POSITION

 

[Cranman67]

Interesting, we pay tax on interest earned from dividends in the UK as it's counted as just another form of income. We also pay tax on interest from savings.

I wonder if this is intended to shy away the institutional investors in favour of the ordinary shareholders and the pension funds, who tend to keep the shares for the long term. Maybe Tim is worried that the stock is going through the roof and that any bit of bad news in the future would cause a flight by Wall Street and a sharp decline in the stock price.

So you pay the same rate of tax on interest and dividends? Hmm. What about capital gains? In Canada we have different rates on all three. The lower rates on dividends and capital gains are meant to encourage investment in general. The investor is compensated for some of the investment risk with more money in his pocket than he would have with interest on a savings account.

 

[xinu]

OTOH, you have Lilyhammer!

It is in Norway. The richest country in the world.

 

[unregbaron]

Why bother paying dividends?

Can't see why Apple needs to do this - its shares are more popular than ever already...

 

[69650]

I cut the sentence below from the draft of the press release. I'm sticking to my assertion that it is $2.65 per quarter. I guess I'll find out later in the year.

"Subject to a board declaration we plan to initiate a quarterly dividend of $2.65 per share beginning in the September quarter."

If definately $2.65 per QUARTER. I just checked on Bloomberg.

 

[Cranman67]

The corps wont give us jobs. The real unemployment rate here is over 20% so it is not in individuals own hands this situation here. Foreigns are making all the labour working for low wages and they wont pay taxes here at all. "Grey-Economy" flourishes.

Now they are telling that food prices go up 10-15% here this year and we are already the most expensive country in the whole world to live. Gasoline is 2 euros per litre. That is 10 dollars / gallon. THANKS.

Ok, I'm sorry I was a little harsh towards you.

But with a flourishing Grey-Economy it sounds like people are at least showing some entrepreneurial spirit. That just needs to be turned into a legitimate self employed enterprise. I'm self employed and that way I can make as much money as I want to (as long as I keep customers happy) and there is no one to fire me.

I know it is expensive in Europe but Europeans also have very high standards of living and good social programs. Not sure of every country involved but aren't you free to move to Denmark or Germany to take up work there? That is a level of economic freedom that many in the world don't have.

----------

Hmmmm.

Hastily Called Weekend press conference??!?!!?!?!?!?!?!?!?
Why not wait until the shareholders conference call.
Buying back stock at an all time HIGH!!!!!???!?!?!?!?!?!?!
Doesn't make sense unless they had to.

In short sales are SOFT. Its the only reason Sales were way off expectations.

Buying back stock is how they will pay executives while the shareholders Nuked.

The tech area reminds me of March 2000

The market is full of HFT and little volume or Liquidity. Don't stand under this or you will be crushed when it falls.

DISCLOSURE: NO POSITION

They couldn't just sit on the cash forever. They kept getting questioned on that and at some point you have to do something with it or hand it back to the shareholders.

Either way its a nice problem to have. Not sure I agree with your assertion that sales are soft. I guess we'll see.

DISCLOSURE: 100 shares bought several years ago

 

[Abazigal]

This will just help keep the share value from dropping when they issue new shares for employees (or when employees exercise an option to buy new shares at a fixed price).

If they were not issuing new shares then repurchasing shares in the market will generally increase the value of the remaining shares. When a company buys its own shares it cancels them so every share remaining owns a little bit more of the company.

So they are basically just spending money to ensure their own executives don't take a pay cut in future.