Apple Set to Pay Dividend, Buy Back $10 Billion in Stock

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After years of fiscal success, Apple has decided to open its purse strings and pay out a quarterly dividend of $2.65 per share, or a 1.8 percent annual yield at today's stock price. The company also announced it will begin buying back $10 billion of its own stock over the next three years.

The announcement doesn't come as all that big of a surprise, though, in light of recent comments from new CEO Tim Cook, who earlier this year said Apple has more than enough money to run the company and was considering how to invest the surplus.

Many analysts had expected Apple – the world's most valuable publicly-traded company – to finally issue a dividend following the death of former CEO Steve Jobs, who was historically hesitant to part ways with company assets. As of late last year, Apple held more than $97 billion in cash and securities – a number that has grown over the last three months with several successful product launches.

While finally heeding the calls of its investors, Apple disappointed some by issuing a dividend with a lower annual yield than those of less successful companies. Competitor Microsoft doesn't print money like Apple, yet still issues a 2.5 percent annual dividend. Shaw Wu, analyst at Sterne Agee & Leach, told Bloomberg he expected Apple to announce between a 2 percent and a 2.5 percent dividend.

The first dividend will be paid out during Apple's fourth fiscal quarter, which begins July 1. The buyback plan will start the fiscal year 2013 "with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs," according company officials.

Between the dividend and the buyback program, Apple expects to use around $45 billion of its domestic war chest – not much considering they’re expected to generate as much as $75 billion this year alone, according to Wu.

The news sent Apple's stock price north of $593, up 8 percent on the day.




Edited by Braden Becker
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