“A couple of weeks ago, Apple (AAPL) blew away analyst estimates with its fiscal second quarter report. Revenues and earnings surprised to the upside as iPhone sales came in extremely strong. Apple issued its usual less-than-expected guidance, but also announced an update to its capital return plan,” Bill Maurer writes for Seeking Alpha. “Part of that plan was a dividend raise, but one that was much smaller than expected. Today, I’ll examine the dividend disappointment, and what it means for investors going forward.”
“Apple raised its quarterly dividend from $3.05 a quarter to $3.29 per quarter, a raise of less than 8%. The new number might seem strange, but it may have to do with the upcoming stock split,” Maurer writes. “I was looking for a raise of about 15% to $3.50 a quarter, and there were analysts looking for potentially 20% or more. Earlier this year, Cisco Systems (CSCO) raised its dividend by nearly 12%, so Apple investors might be frustrated that they didn’t get that much. Late last year, Microsoft (MSFT) raised its dividend by almost 22%, with another raise expected later this year.”
“Perhaps the one question worth asking if this is a true raise. At the end of Q2 last year, Apple had just over 940 million shares outstanding. At the end of this year’s Q2 period, the outstanding share count was under 862 million,” Maurer writes. “That’s a decline of about 8.33%, which is actually larger than the dividend’s raise of 7.87%. So even though Apple raised the dividend amount, the company may actually pay out less in total dividends.”
Read more in the full article here.