“As someone who follows Apple (AAPL) quite extensively, I’ve read a lot lately about capital returns,” Bill Maurer writes for Seeking Alpha. “There’s a lot of talk out there about Apple’s dividend being raised, a buyback increase, and strong capital returns for many years to come. However, some of this talk neglects a key issue, and that is Apple’s available resources. Apple has a lot of cash, but most of it is unavailable in its current form. That’s a problem. Apple has really pounded the table lately with its buyback, but I think investors have become spoiled.”
“Apple is a cash generation monster,” Maurer writes. “Apple produced a lot of cash in recent years, and the company has really started to return capital to shareholders. Those returns are going to be strong again this year. In fiscal Q1, ending in December, Apple returned about $7.8 billion between dividends and buybacks. That was before Apple bought back $14 billion in stock after shares fell post Q1 earnings. Even if Apple didn’t buy back another share in the quarter, Apple’s capital returns in the first half of the current fiscal year would be over $24 billion. Adding in two more dividend payments gets Apple to about $30 billion for the fiscal year, and that assumes no buybacks in fiscal Q3, Q4, or anything else in Q2. If Apple does buy back some stock, the company will likely top the $33.424 billion number in my table above.”
Maurer writes, “So that gets us to the main point, and that’s looking forward. Those investors that are looking for consistent large dividend raises in the next 5-10 years plus a ton of buybacks may be in for a rude awakening.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Brawndo Drinker” for the heads up.]
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Piper Jaffray: Apple to announce ‘modest’ increases to dividend and buyback programs in next earnings call – April 2, 2014