“Since Apple began its capital return program in 2012, share buyback as rightfully received most of the press and attention compared to quarterly cash dividends,” Neil Cybart writes for Above Avalon. “Apple has repurchased $73 billion of its stock, nearly three times as much as the $27 billion spent on cash dividends. However, from a signaling effect, cash dividends may do more than share buyback in portraying management’s opinions and views about future business prospects. ”
“Management included language in its financial filings that Apple intends to increase its quarterly cash dividend each year,” Cybart writes. “Next month, during the annual review of the capital management program, Apple’s board will likely approve an increase to Apple’s quarterly cash dividend to approximately $0.50 to $0.51/share, up 8% from the current $0.47/share dividend, which would represent a 1.6% dividend yield at the current stock price. The board approved a 8% dividend increase last year.”
“Much of the significance underpinning Apple’s buyback and dividends has been lost on market observers as the focus remains on the near-term trade, ignoring capital management’s long-term signaling effect,” Cybart writes. “While share buyback and dividends (both cash and stock) do not guarantee positive stock price moves in the future, market observers can use such activity as an indicator for how management views the future. By issuing a cash dividend, management is showing confidence that the business is supportive of a recurring cash expense going forward in the form of the dividend.”
Read more in the full article here.
MacDailyNews Take:
Own Apple, don’t trade it. – Jim Cramer
MacDailyNews Note: Apple is expected to release fiscal Q215 earnings along with any dividend and buyback changes on April 22nd.
Currently, MSFT offers a 3.01% yield on its equities, which this year alone ranges from 2.48-3.01%. Now, Apple Inc. has approximately DOUBLE the cash on hand (worldwide), double (+) the market value, and sales forecasts (especially worldwide) rocketing off the charts . . . .
And its dividend is currently HALF that of its chief competitor. Hmmm. Saving all that real and potential money for a rainy day, I guess—or perhaps even MORE share buybacks?!
M¢ stock has preformed so poorly since about 1999 that the only way it can keep investors, not the Gates, Allen’s or Ballmy’s of the world, is to continue giving money away.
There is so much more to dividend payout ratios than just the dividend.
What most “analysts” (armchair and pro alike) ignore is the amount spent on share buybacks (monies that could just as easily have been used for dividends), and stock appreciation.
Between the 3 an AAPL investor from a year ago has received close to 70% ROI.
Between dividend yields, stock buybacks and equity appreciation a MSFT investor has barely made 10% in the same time frame.
Frankly, i ignore dividend yields. If yields of that nature were important to me I’d be buying tax free muni’s.
Apple’s cash abroad is meaningless for such discussions, as it won’t be repatriated until Obama is finally out and a reasonable non-Marxist is in the White House and we can get another tax holiday.
Or better yet, change the US tax code to conform with how every other country taxes foreign profits, i.e., THEY DON’T. Then we’d see some ridiculous dividend yields!
The U.S. corporate tax rate is the result of many, many years of actions by both political parties, and a tax holiday is a stupid idea, like waving your hand to blow away a bad fart.
Congress needs to clean up the tax code across the board. But any tax reform plan has to begin ramping up total tax revenues to match our annual expenditures. We need to start paying for the services that we consume. That pain is the only way that we will ever learn to live within our means as a country. Our current budget is like a teenager with a credit card – all fun and no pain until the inevitable crash.
A higher dividend yield for MSFT? That’s what happens when the stock price languishes for fifteen years. Look at total return since 2000 (or whatever year you choose) and AAPL will likely crush MSFT.
You cannot compare Aapl and MSFT. One is growing the other is not.
Sure I would love an increased dividend. More money to reinvest in Apple.