Today Apple Inc. (NASDAQ:AAPL) shares are now ex-dividend, which means that investors who buy them between now and the dividend pay day of Feb. 13 will not receive the dividend. Meanwhile, a closer look at the company’s share buyback plan shows how its share buyback plan didn’t just benefit shareholders.
Apple pays dividend next week
Apple Inc. (NASDAQ:AAPL) will pay out $3.05 per share in dividends next week Thursday to shareholders who bought their shares by the end of the trading day yesterday. As Daniel Eran Dilger of Apple Insider notes, the current share price makes Apple’s dividend yield 2.37%. NASDAQ will automatically adjust the price of Apple shares according to the dividend because paying that dividend slightly reduces how much Apple is worth because it comes from its cash holdings.
Of course since shareholders are receiving this dividend and expect more dividends in the future, they end up offsetting the adjustment. Also Apple Inc. (NASDAQ:AAPL)’s share buyback plan has been reducing the number of outstanding shares which exist, which makes them more scarce and increases the share value.
Apple saves on dividends
According to Dilger, Apple Inc. (NASDAQ:AAPL) has paid out about $2.5 billion to $2.8 billion in dividends each quarter. Then the company added $50 billion to its share buyback plan and raised its quarterly dividend from $2.65 per share to $3.05 per share. Apple paid $16 billion in the June quarter to buy back 36 million of its shares and then an additional 10.4 million shares in the September quarter.
He estimates that Apple Inc. (NASDAQ:AAPL) will pay about $143 million less in dividends after buying all of those shares and called its share buybacks “essentially a massive acquisition of itself,” noting that the purchases were even bigger than when Google Inc (NASDAQ:GOOG) paid $12.5 billion to acquire Motorola Mobility.
Shares of Apple Inc. (NASDAQ:AAPL) rose less than 1% at the NASDAQ in intraday trading.