Apple Prepares to Pay Out Almost $3B in Dividends
Apple (NASDAQ:AAPL) announced in its fiscal 2014 first-quarter results that a cash dividend of “$3.05 per share of the Company’s common stock” would be paid on February 13 to “shareholders of record as of the close of business on February 10.” However, as pointed out by Daniel Eran Dilger at Apple Insider, investors must have purchased their Apple stock before the market closed on Wednesday if they were hoping to collect this quarterly dividend.
Fortune’s Philip Elmer-DeWitt reported last year that the cutoff date is due to the “ex-dividend” accounting principle. Essentially, this formula ensures that the dividend is paid to whoever owned the stock several days before the actually dividend is paid out. A stock sale takes several days to fully process, hence the cutoff date for qualifying for the previous quarter’s dividend payout.
Per Apple Insider, a dividend payment actually reduces the value of the company, since the dividend is paid from the company’s cash hoard. However, this value reduction is countered by the prospect of future dividend payments, as well as the company’s stock continued appreciation. Apple is also boosting the value of its stock with a share repurchase program.
Apple’s share buyback program has recently come under increased scrutiny thanks to activist investor Carl Icahn’s ongoing campaign to convince the company to expand the program. Icahn’s Proposal No. 10 requests “that Apple commit to completing not less than $50 billion of share repurchases during Apple’s fiscal year ending September 27 (and increase the amount authorized for share repurchases under its Capital Return Program accordingly).”