“While Apple’s product releases are undoubtedly a major driver for Apple’s stock, the company is creating value for shareholders in other areas far more imperceptibly: through dividends and share repurchases,” Daniel Sparks reports for The Motley Fool. “”
“While Apple’s dividend yield may be relatively small at just 2.3%, management’s efforts to return cash to shareholders are extremely aggressive when you also consider Apple’s share repurchases over the past 12 months,” Sparks reports. “In that period, Apple has bought back a whopping $40 billion worth of its shares. Even more, in the weeks following a sell-off sparked by less than expected first-quarter iPhone sales, Apple opportunistically repurchased $14 billion worth of its stock.”
Fool contributor Daniel Sparks takes a closer look at how Apple is building shareholder value by buying back its own stock at excellent prices, here.
Related articles:
Morgan Stanley: Institutional investment in Apple at a 5-year low – February 26, 2014
Barclays downgrades Apple stock rating – February 21, 2014
Yooos’ll see….
And if the stock price stays the same despite the stock buy back, how has it added value for the stockholder?
3 ways, off the top of my head:
1. If the stock price stays the same, stockholders make money from every single dividend payment.
2. Every stock repurchased is another stock Apple no longer has to pay dividends for, which translates to more money for Apple and its shareholders.
3. Repurchasing prevents the stock from losing value. Not losing value is more money for shareholders.
Stock buybacks don’t build value. Stock buybacks shrink the investor pool and drain company cash — primarily useful for those who are paid bonuses based on short-term stock price or for brokers who operate on commission. The long-term investor gains nothing while company management focuses on stock price games instead of running the best business they can.
Oh how I HATE this phrase…
“… management’s efforts to return cash to shareholders…”
It keeps the myth alive that Apple’s cash is somehow the shareholder’s cash. It also keeps the myth alive that shareholders gave money to Apple and Apple has some responsibility to “return” that money to shareholders?
Only an *extremely* small number of shareholders gave money directly to Apple and to my knowledge NONE of them are demanding that Apple “return cash” to them.
There is nothing to “return” to virtually 100% of shareholders. It is just another way for “Wall Streeters” to make it seem like companies like Apple “owe” money to them.
“It keeps the myth alive that Apple’s cash is somehow the shareholder’s cash.”
Whose IS IT, then, oh wise one? Tim’s? Steve’s widow? The government’s? Yours? If I were smart enough to purchase a ’63 Ferrari 250 GTO (in 1963) and it increased exponentially in value over the following 50 years, whose money is that? “The people’s”? Be careful, shadow; your envy is showing.
I think you need a lesson in capitalist ownership.
The word “share” refers to a share of the company! fancy that!
First, Apple’s assets *are* the property of the shareholders. If you own AAPL, then you own a piece of the company.
Second, there is no “myth” that current shareholders gave money to Apple. A corporation only receives money from shares that are newly issued and sold. This is typically done to obtain investment capital for growth.
Third, Apple does have a fiduciary responsibility to properly manage its assets. Part of that responsibility is deciding how much cash and securities the corporation should retain to handle ongoing business and to reserve for potential investment/acquisition opportunities. Some investors become concerned when a company amasses a large amount of cash and securities because the excess cash will tend to reduce the corporation’s ROI. In other words, a corporation is expected to return a higher ROI because it represents a larger investment risk. If the company retains a large amount of cash and securities rather than reinvesting those assets in the company to spur growth or returning the excess assets to shareholders, then the company starts becoming an “investment bank.”
Some people on this forum have advocated that Apple use “its” money to buy back stock and “go private.” Hopefully, it is clear from the explanations above that this is not possible. Buybacks simply concentrate ownership in a reduced number of shares and shareholders. Taking a company private requires new, external money to purchase the outstanding shares.
Through reinvesting my appl holdings have increased by nearly 5% since dividends were started in 2012. This may not seem much but it represents additional assets without zero financial outlay.
$40B buyback is “subtle”?
I’m going to ask my boss for a subtle pay raise.
Back already. His response was also subtle.
lol
Those who focus on the near-term stock fluctuations as a measure of the success of the stock buyback are misguided. Apple management has many options for investing Apple’s cash stockpile. They would not have invested that cash in a stock buyback unless they were very confident that the value of the stock bought back would appreciate significantly more than if they had invested in, say, Berkshire Hathaway (9% annual return), or in buying up another company. In my view this, along with Tim Cook’s behavior at the shareholder’s meeting, indicates that Apple is playing a very strong hand. They’re just not ready to show their cards yet.
Nice handle
With Tim Cook’s latest outburst about the global warming hoax and clearly establishing him as an ubber-liberal, along with his declaration that he didn’t want any conservatives holding the AAPL, why doesn’t he just buy it all back and run the company in the ground without further interference.
Tim Cook didn’t say he didn’t want any conservatives holding stock, he only said that he thought that global warming deniers like the NCPPR should get out of the stock. The stockholders overwhelmingly agreed with him.
Barbara Bennett clearly gets her information from the right wing echo chamber. In the real world climate change evidence is fairly overwhelming. (and by the way, only one b in the prefix uber)