The Apple Stimulus: 3 reasons why Apple’s dividends will boost AAPL shares, the markets and the economy

“No one can deny that today is ‘Apple’s Age’ and indeed, Apple’s economic impact is quite substantive,” Bachar Samawi writes for SeekingAlpha. “With its latest announcement for a $10 billion stock buyback and $2.65 per share quarterly dividend, Apple’s cash infusion into the economy is paramount to an economic stimulus, the Apple Stimulus.”

“During the next three years, such stimulus will add up to about $45 billion, or about $15 billion per year. Relative to the massive size of the U.S. $15 trillion economy, such a number may sound minimal at 0.1% of U.S. GDP. However, when U.S. GDP is expected to grow by an average of about 2.5% for 2012, Apple’s annual $15 billion is about 4% of the expected change in U.S. GDP,” Samawi writes.

“It should be noted that when applying economics 101, dividend payments will not actually result to a change in the current calculation for GDP; dividends do not represent goods and services from current production, hence, having no immediate impact on current GDP estimates and gross domestic income,” Samawi writes. “However, such Apple stimulus will have a positive effect on the economy and markets in the following three ways.”

1. Increase in personal income
2. Dividend reinvestment
3. Capital gains

Read more in the full article here.

4 Comments

  1. Does anyone yet know:

    1. Will Apple offer an automatic dividend reinvestment option?

    2. When will the dividend be paid, and what will be the date of record for dividend ownership?

    1. Dividend reinvestment is up to the individual. Just specify it in your brokerage account, which will automatically receive the dividend payment if you own shares of Apple.

  2. The Apple shareholder who needs cash can sell some of his shares, and that is what is happening now, with the money spent on goods and services. But, with receipt of a dividend, the need to sell shares will be reduced commensurate with the amount of the dividend. The net effect on the amount of goods and services purchased by the cash poor shareholder will therefore be zero. On the one hand the shares cashed in cannot be measured and thus are known unknowns, whereas the dividends can readily be measured as they are known.

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