“Apple announced a massive increase to its capital program, but the majority of capital returns will be conducted through share repurchases,” Bob Ciura writes for Seeking Alpha. “Investors hoping that Apple would significantly increase its dividend, which seemed entirely appropriate given its fantastic earnings growth and mountain of cash on the balance sheet, should be disappointed.”
“For income investors, Apple’s dividend policy is a disappointment,” Ciura writes. “Growth investors obviously should love Apple’s capital return policy. The company is rapidly growing revenue and profits and is leveraging its balance sheet to buy back a ton of its stock. These initiatives should all help boost Apple’s stock price. However, investors interested in Apple for its dividend will not be as thrilled with Apple right now. Apple stock, even including the dividend increase, yields just 1.5%. This is significantly below the S&P 500 average yield of around 2%.”
“Investors who have held Apple stock for any length of time are likely sitting on significant gains since Apple is up 115% in the past two years,” Ciura writes. “For those who want income, it might not be a terrible idea to take some profits off the table and reinvest the proceeds in a stock that offers a more compelling dividend yield.”
Read more in the full article here.
MacDailyNews Take: Apple is obviously focused on buybacks. Dividends are just a nice little perk for growth investors.
Apple expands capital return program to $200 billion – April 27, 2015