Those who have held Apple Inc. (NASDAQ:AAPL) since its fall from grace when it reached its high last September will have additional reason to celebrate next week. In addition to the stock making a steady rise since Apple Inc. (NASDAQ:AAPL)’s last earnings report, shareholders will see Apple distributing a record quarterly dividend of $3.05 on Thursday.
Newer Apple investors will have needed to make their purchases by the close of the markets, in this case the NASDAQ, this last Wednesday in order to be considered “shareholders of record” and receive their dividend payment.
Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More
Apple Inc. (NASDAQ:AAPL)’s “Ex-Dividend” explained
The delay was explained to Apple Insider by Philip Elmer-Dewitt last quarter—it is due to an accounting principle know as the “ex-dividend” or reinvestment date, which determines the party owed the dividend when shares change ownership immediately before the dividend is paid. When a share is sold, the transaction does not “settle” for three days.
The NASDAQ, on dividend payment days, automatically revalues the company’s stock by the dividend price owing to the fact that dividends are paid from company’s cash on hand. Given Apple’s stock buyback program, investors shouldn’t see to much change in the stock price given the growing scarcity of Apple’s stock when it takes them off the market.
Over the past year, Apple has been averaging a pay out in dividends each quarter of $2.8 billion. Last quarter this number jumped to $2.8 billion when Apple decided to increase the dividend by 15 percent. Presently, there are 908.4 million shares of Apple outstanding.
Apple Inc. (NASDAQ:AAPL) buy back frenzy
Last year, Apple announced its expanded capital return program to mixed reviews. Many felt that the program was too stringent and that Apple should reserve the right to buy back shares when appropriate rather than simply guaranteeing that it was in the offing. Part of this expanded capital return program was the raising of the dividend from $2.65 to $3.05, the company also added $50 billion to its buyback program.
Given a stock price that Apple hadn’t seen in quite some time, it went on a buy-back frenzy last quarter taking 36 million shares off the market at an average price of $444.44. Apple Inc. (NASDAQ:AAPL) will spend $44 billion more in buybacks by the end of 2015.
With Apple Inc. (NASDAQ:AAPL) trading at $460 per share, it saved itself nearly $600 million by buying and essentially destroying its stock last quarter. Additionally, by “destroying” 36 million shares it has saved itself $109 million in dividend payments.