Apple increases dividend by 15%, poised to embark on large stock-repurchasing plan
In conjunction with its earnings report for Q2 2013, Apple issued a press release announcing some major plans for its ever-growing stockpile of cash.
In March 2012, Apple announced that the company would be instituting a $2.65/share dividend on a quarterly basis with Apple's first dividend payment to investors going out in August of last year.
Now, about one year later, Apple announced its plan to increase its quarterly dividend to $3.05 per share. The next dividend payout to investors is scheduled for May 16, 2013.
What's more, Apple also announced a massive increase to its stock-repurchasing plan.
As part of this program, the Board has increased its share repurchase authorization to $60 billion from the $10 billion level announced last year. This is the largest single share repurchase authorization in history and is expected to be executed by the end of calendar 2015. Apple also expects to utilize about $1 billion annually to net-share-settle vesting restricted stock units.
When Apple first announced its dividend and stock repurchasing plan last year, it revealed that both initiatives would eat up about $45 billion from Apple's cash reserves. Under Apple's more aggressive dividend and stock repurchasing plan, Apple notes that the company will now be using $100 billion of its cash reserves to return money to shareholders and repurchase outstanding shares.
The company expects to utilize a total of $100 billion of cash under the expanded program by the end of calendar 2015. This represents a $55 billion increase to the program announced last year and translates to an average rate of $30 billion per year from the time of the first dividend payment in August 2012 through December 2015.
For a company that was long content to sit on its growing cash hoard under the helm of Steve Jobs, today's announcement represents a monumental shift in Apple's use of cash.
Regarding Apple's new use of cash, Apple CEO Tim Cook explained in a press release, "We are very fortunate to be in a position to more than double the size of the capital return program we announced last year. We believe so strongly that repurchasing our shares represents an attractive use of our capital that we have dedicated the vast majority of the increase in our capital return program to share repurchases."
Thus far, Wall Street seems to be pleased both with Apple's earnings report and news of its expanded cash program. In after hours trading, shares of Apple are up nearly 5 percent, trading up nearly 20 points.
