Apple Inc. will Spend $45 Billion on Dividend and Share Buyback

Apple Inc. will Spend $45 Billion on Dividend and Share Buyback
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Apple Inc. will Spend $45 Billion on Dividend and Share Buyback

Apple Inc. (NASDAQ:AAPL) is sitting on a whopping $100 Billion cash. Early this morning they organized a press conference to announce what they’re going to do with the huge cash pile. The good news is that the wait is over and the Cupertino based company has announced their plans for future. The company intends to issue dividends to their shareholders and also start a share repurchase program later this year. Apple is planning to spend $45 billion over the next three years for successfully executing these programs.

On this occasion, Tim Cook, Apple’s CEO said:

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We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future. Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program.

The company has announced a dividend of $2.65 per share sometime in Q4 2012 , beginning this July. Apple’s (NASDAQ:AAPL) share price is already at a high of $600 and with this news it wouldn’t be surprising if their stock prices reach a new high. The last time Apple gave dividend was in 1995 and paid a mere $0.12 per share. Things have definitely changed and Apple is in a very good economic condition. It may also be possible that in the next three years, Apple can add to its $97 billion cash load.

Apple’s Board of Directors have given their green signal to buy back $10 billion of stock over a period of next three years. This repurchase program is going to start from September 2012.

For now we can say that this move of Apple has put their shareholders in a very good condition. A dividend of $2.65 per share is not that bad and it can put a smile on shareholders’ faces. No doubt, this is a good move by Apple. They could have acquired tech giants but they’ve decided to pay dividend and buyback  shares instead. Ben Graham likely would have approved

Do you think this is a good move by Apple? Share your thoughts in the comments.

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