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Apple Announces Plans to Initiate Dividend and Share Repurchase Program
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Geez.
That's more than you'd get by investing in CDs or money markets these days. And that's also on par with other large companies. Also, that's "income", on top of any growth in value you'd see due to rising stock price. So if the stock rises 10% in a year (which is much less that its recent record), your total gain is 11.8%.
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The only people unhappy with this are of course those who don't own shares hehe.
Exactly. Or those who don't understand investment.
All I'll do with the dividend is just reinvest it in the company.
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"But Apple will generate $75 to $80 billion in free cash over the next four quarters alone, according to estimates by investment bank Sterne Agee."
Taken from http://blogs.smartmoney.com/advice/2012/03/19/why-apples-record-dividend-looks-stingy/
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"But Apple will generate $75 to $80 billion in free cash over the next four quarters alone, according to estimates by investment bank Sterne Agee."
Taken from http://blogs.smartmoney.com/advice/2012/03/19/why-apples-record-dividend-looks-stingy/
Apple generates $10 billion of free cash flow every quarter. They just announced that they will distribute $10 billion per year and spend another $10 billion over the next 3 years on buybacks. They will still be generating a lot of cash that they can use to invest in new product development.
There aren't any US banks that'll pay anywhere close to 3% on a Savings account or CD at the moment. Maybe you can find one or two that'll pay that for a few months if you open up a new account, but not long term. Rates are in the 0.3 - 0.8% range depending on the bank.
There's plenty of safe companies that pay dividends in the 1.5% - 2% range, most of them aren't seeing 50%+ price appreciation either.
Besides, if you bought AAPL at $150 and held, your yield is significantly higher
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I agree with your final position, but not so much with your three points.
1 - Current shareholders can take profit by selling, which is nice, but shareholders should be able get both the revenue from the company and the upside of continuing ownership.
2 - Apple projects to make more than $15 billion in profit this calendar year. They are ramping up production to the point where they are starting to meet demand (see how many places got iPads on Friday), that means potential for much higher profits. If they can ever launch their products worldwide on the same day, they could do $15 billion in profit in a good quarter. The demand is currently there for their products.
3 - Share buybacks are a nice way to return money to shareholders without creating a big tax issue for most of your shareholders. Yes, capital gains is only 15% for now, but paying that tax on dividends is one of the drawbacks of dividends. A share buyback should increase the price of Apple's stock as it has the effect of reducing dilution. But unless you are a shareholder selling your stock, the increase in your stock price does not have any immediate tax cost.
and that question alone is why the US denied the tax holiday. It did not create more jobs in the US but instead made it worse.
over 90% of the money brought "home" went to investors and some companies shifted more stuff over seas in hope of the next holiday.
More like exhausting. Some investors understand the implications of a company carrying excess cash on the books and others don't. Some have a concept of the size of Apple's cash hoard, and the rate of accumulation, and others don't. That's pretty much the entire difference we are talking about here.
Umm the argument companies used was it was going to be spent at home to create more jobs which the holidoy proved it was complete BS as like I pointed out. More jobs were shipped over seas, and it was not spent at home for investing in the companies or expanding but instead given away.
Companies "claimed" they need the money to expanded at home. It was shown to be a lie.
As such screw the tax holiday. Now rewriting the tax code I support. A tax holiday I say hell no to as been counters and mega rich are the only ones who benefit. the rest of us suffer for it.
I have zero sympathy or good will for investors as they are the large part of the reason we went into this recent depression we still have not recovered from.
1. Not really, unless you are focused in the price the day before ex-dividend and the day after. Anyone who does that has my sympathy but not my empathy.
2. Not really, unless you prefer to make less money. See #1. At this point dividends are taxed at a flat maximum rate of 15%, the same as capital gains. This is how wealthy Americans have managed to become so much wealthier over the past ten years.
3. Okay.
4. Very true. Apple is not in the banking business and those of us who want to see them grow their technology business should not be advocating for them becoming a bank.
Actually, Apple is buying back shares for RSUs.
In Apple's case, the point isn't to increase shareholder value for existing shareholders; the intent is to maintain the same number of shares in circulation as employees exercise stock option grants, etc. over the next few years.
If they didn't do the share buyback, they would have to issue new shares and that would dilute the value of existing shares in circulation.
You're starting to scare me.
I'm worried about an impending tinfoil shortage. Seriously.
Who do you think is going to make all your iToys? A commune?
Where are they going to get the financing to do it?
Investors. Oops.
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Apple is up $13 this afternoon.
Any other investing insights, Bernie?
So what? Anyone who works on a visa overseas has to pay double taxes. It may not be 'fair', but that's the game you play for doing business internationally. If individuals have to do it, so should corporations.
Because what, corporations should pay no local taxes to the U.S. just because China or Germany or Jamaica already got a tax slice? If Congress changed the law, corporations would just move ALL of their revenue overseas and the U.S. corporate tax revenue would plummet (it's already WAY below where it should be). Yes, tax law needs to be drastically reformed, but not so corporations can get a free ride while the average taxpayer gets screwed.
Apple is up $13 this afternoon.
Any other investing insights, Bernie?
Yeah, there have been approximately 50 trading days this year? AAPL is up 193/50 days or $3.86. Subtract the average growth per day from the $13 you just told me and you get about $9<$10.60 (and that's significant enough for you to not just push delayed issue of the dividend as the reasoning).
Really? Come on you are simply pushing that the $13 is entirely due to the dividend being issued, which is ridiculous. My argument at least tries to take away AAPL's day-to-day operations and the growth from said operations, but it does not include things such as iPad's record sales beating expectations and the like. Therefore this day would probably have been higher in terms of growth than the average day, but it didn't.
So yeah, most practical investor theory will tell you that you will never get 100% of your dividend back in terms of stock growth. It's a one-time (or four-time) issuance, and doesn't affect the share price (which is logical, why would I pay for past dividends?).
The problem is, they AREN'T using the money. It's just sitting there, aside from a few paltry acquisitions. I'd rather see them do something BIG (start their own cellular service, for one) than just shrug their shoulders and return the money because they can't think of anything better to do with it. There's a lot they could do with the money they have, and dividends is the worst option.
As an investor, I don't want dividends. I've already had 'insanely great' returns on my investment. I don't need an additional payoff. I want to see Apple continue to break into new markets with the money they've earned. This is showing a lack of vision on Cook's part.
What Apple won't say, of course, how much they will put into product development and emerging into new markets.
I'd like to know more about the arguments that made Apple decide to buy back some of its own stock at a historic height of its value. Does Apple have such a great new product or business up its sleeve that will give the stock another jump, or is it simply the trust in that the rise of Apple will continue for the years to come with the products we know.
I also wonder why Apple publicly announced the stock buy-back. It will probably increase the stock value and Apple has to pay more for its stock. On the other hand, the existing stock it holds will increase in value, and the increase in total stock value Apple holds may be much higher than the price increase that will happen due to Apple's announcement.
I'd like to know more about the arguments that made Apple decide to buy back some of its own stock at a historic height of its value. Does Apple have such a great new product or business up its sleeve that will give the stock another jump, or is it simply the trust in that the rise of Apple will continue for the years to come with the products we know.
I also wonder why Apple publicly announced the stock buy-back. It will probably increase the stock value and Apple has to pay more for its stock. On the other hand, the existing stock it holds will increase in value, and the increase in total stock value Apple holds may be much higher than the price increase that will happen due to Apple's announcement.
No, it's the best option in my opinion. Except for rare occasions, multi-billion dollar acquisitions are destructive to shareholder value. Even so, they can pay dividends AND invest in whatever they want. They simply have that much money.
But you could have had larger returns if Apple were a leaner company. If you buy Apple stock now you're buying an amazing tech company and...cash. That's not useful. You could have made more money if you had invested the same amount and got a larger stake in the productive part of the company and a smaller stake in cash. The ROE, while fantastic, has been hindered by the cash balance.
Honestly, people don't quite understand how much money Apple has. You act like returning money to shareholders that they aren't using (while funding new products, conducting R&D, and expanding) is a bad thing.
Right, so the share buyback is a means to decrease dilution as compared to the alternative, which is issuing new shares. Everyone knows that Apple will be compensating its employees and senior leadership with shares. This way they can do that without diluting the current shareholders. Increasing shareholder value or maintaining shareholder value is basically the same thing. The share buyback takes cash from Apple and puts it in the hands of shareholders. That is what we have been wanting for some time.
Interest bearing accounts that yield 3% are hard to find.
Beyond that, there's no news as to whether that dividend yield will grow (as many do) and your Apple stock enjoys capital appreciation, which no bank account will do.
This dividend is a "perk" for investors - and a decent one. But no, it doesn't magically turn Apple into the best income stock ever. If that was the expectation, folks were going to be disappointed.
Absolutely backwards. Sitting on that big pile of unproductive cash was
the antithesis of focusing on great products. Apple was wasting too much effort trying to manage financial instruments in order to maximize the return on their cash pile.
Now they are doing the right thing, by turning back some of the cash to their investors, who can manage their own money themselves. Apple shouldn't be doing it for them.
I'm not suggesting they make some huge acquisition -- that usually turns out badly and Apple's culture would be at risk.
Starting a cellular service was off the top of my head, but what I'd really like Apple to do with that $100B instead of dividends is to build manufacturing facilities here in the States in order to bring some jobs back from China. That would help the American economy a lot more than handing out dividend checks. If Apple is making so much money that they have to give it away, they can certainly afford to pay American workers to produce Apple products.