Apple is selling $14 billion of debt to take advantage of cheap borrowing costs, tapping the bond market for a third time since May as the company looks to return more cash to shareholders.
Jack Pitcher for Bloomberg News:
The company is issuing debt in six parts, according to a person with knowledge of the matter. The longest portion of the offering, a 40-year security, will yield 95 basis points above Treasuries, after initially discussing between 115 and 120 basis points, said the person, who asked not to be identified as the details are private.
Until 2020, Apple hadn’t borrowed in the U.S. investment-grade market more than once in a calendar year since 2017. But rock-bottom interest rates are proving too tempting for the world’s most valuable company to pass up as it pursues aggressive share buybacks and dividends.
The tech giant said it will use the proceeds for general corporate purposes, including buying back stock and paying dividends. It may also be used in funding for working capital, capital expenditures, acquisition and repayment of debt, the person said.
After years of hoarding cash, Apple has been working to reduce its net cash position, largely through payouts to stockholders. Still, the company may need to expand its annual shareholder returns to over $100 billion to reach its net-cash neutral target over the next few years, according to Bloomberg Intelligence.
MacDailyNews Take: Near the end of April, with Apple’s fiscal Q221 earnings release, we’ll find out what Apple’s board of directors does with the cash dividend (currently $0.205 per share of common stock) and what sort of increase they commit to the existing share repurchase program.
If Apple ever buys all of its shares, it will become private. Is this a possible goal?
Not how it works, sorry.
(With each share bought back and retired, the remaining shareholders — in your extreme case just one single shareholder– simply own a larger percentage of the outstanding shares.)
buybacks are stupid. why split shares only at some time turn around and buy them back. all companies need set a percentage of profit that will be paid out and then do so. a pitiful 3 or 4 percent as a dividend is ridiculous. 80% of the profit should be paid to the stockholder as a return for owning the shares. The share price going up has nothing to do with what the company should provide to the shareholder and really the company should no be involved in manipulating the company share price, even with publicly announced buyback plans.
The way of our time…thanks to the Fed. It’s a system set up for the wealthy to get wealthier (being wealthy isn’t the prob).
95% will be going to stock buybacks and barely 5% will go to dividends. Can’t Apple give at least a 1% dividend yield to top Microsoft’s .97% dividend yield. Apple’s revenue and profits are far higher than Microsoft’s, so I wouldn’t think it’s a problem for Apple to give a higher dividend yield. I’m simply not smart enough to understand the buybacks versus dividend strategy of Apple.
I honestly wonder if big investors actually prefer stock buybacks instead of Apple making some large acquisition or offering higher dividends. In the end, I think big investors are going to yawn over the buybacks and then give all their money to Tesla because EVs are seen as the future of transportation. I’m still amazed how investors would much rather pay $850 a share for Tesla and not $135 for Apple. That’s a head-scratcher to me but I suppose Tesla will make far higher share gains than Apple ever will. I doubt Apple ever had a P/E of 1600 even when the iPhone changed the entire world of mobile computing.