Apple Shows Investors the Money
Apple’s (NASDAQ:AAPL) impressive cash pile has been a topic of debate for years. Some shareholders argued that the tech giant was hoarding greenbacks with a depression-era mentality, while others believed Apple should not be pressured to use the cash for financial engineering. Either way, Apple recently decided to expand its record-breaking capital return program.
After Wednesday’s closing bell, the world’s most valuable company announced it would return over $130 billion to shareholders by the end of 2015, up from its previous $100 billion plan. Apple raised its share repurchase program to $90 billion from $60 billion, and hiked its dividend by 8 percent to $3.29 per share. Apple also plans to increase its dividend on an annual basis. With annual payments of $11 billion, Apple is one of the largest dividend payers in the world.
“We think very deliberately about how much and in which way to return cash to our shareholders. We decided to continue to allocate the vast majority of the incremental capital return to share repurchases because we believe our current stock price does not reflect the full value of the company,” explained Tim Cook, chief executive officer, on the quarterly conference call. “The size of the share back increases the signal of the Board and the management team’s strong confidence in the future of Apple. We also understand the importance of the dividend to many of our investors and we are increasing it for the second time in less than two years.”