“Apple (AAPL) has been hot in the news lately, and for good reason. The company reported record March quarter revenue and 15% EPS growth,” Dividend Appreciator writes for Seeking Alpha. “The company is now also much more geographically diversified when it comes to revenue as fully 66% of revenue is generated abroad. It also announced several shareholder-friendly measures like a dividend-hike of 8% and an increase in the share repurchase program.”
“A year ago Apple announced a share repurchase program of $60 billion, one of the largest share repurchase programs ever announced by any company. Apparently the board thought it could do better and so on April 23 the company expanded the program to $90 billion,” D.A. writes. “Based on a current market capitalization of approximately $510 billion, that means the company will retire fully 17.6% of its shares under the current program. That is simply massive, even if you compare it to seasoned share repurchase companies in such high cash flow businesses as tobacco.”
“Since reinstating its dividend at $2.65 in the summer of 2012, the company has increased the quarterly dividend twice. The last increase to $3.29 was announced on April 23. On an annualized basis that translates into a yield of 2.2% based on the closing price on April 30,” D.A. writes. “The annual dividend payment of $13.16 per share is covered by an earnings per share for fiscal year 2013 of $39.75. That’s a payout ratio of 33% which means the dividend should be very secure. Even without much earnings growth, the company has room to increase its dividend for years on end. Over the next five years the analyst community expects Apple to grow EPS by 15%. If we assume that the valuation remains the same and add in the dividend, total expected annual shareholder return comes in at a solid 17.1%. That is far above the stock market’s historical return of approximately 10%.”
Read more in the full article here.