|iYawn? Apple Announces a Dividend and Share Repurchase Program|
By Michael Comeau MAR 19, 2012 9:15 AM
This morning, Apple revealed its plans for its $98 billion pile of cash.
Apple's (AAPL) had something of a high-quality problem for quite a while now -- it has more money than it knows what to do with.
Well this morning, after months of speculation on Wall Street and in the media, Apple finally announced its plans for its big fat $98 billion pile of cold hard cash.
Starting in the fiscal-fourth quarter, which begins on July 1, 2012, Apple will pay a quarterly dividend of $2.65 per share. This equates to an annual yield of 1.8% based upon Friday's closing price of $585.57, putting it slightly below the S&P 500's (^GSPC) 2.0% dividend yield.
Compared to other tech giants, Apple's yield comes in below Microsoft's (MSFT) 2.5%, but above Cisco (CSCO) and Oracle's (ORCL).
In addition, Apple said it will initiate a $10 billion share buyback program starting in fiscal 2013, which begins on September 30, 2012.
However, given that Apple has a $550 billion market cap, the buyback is likely to elicit yawns. At the very least, Apple came right out and said that the repurchase program will be used to neutralize dilution from employee equity grants and stock options -- no pretending that a buyback is a "return of cash to shareholders" or any other such nonsense.
In all, Apple's plan to spend its dough is not generating much excitement on the part of investors, and the lack of sizzle has taken the stock off its $608.37 early-morning high to around the $590 level.
This news doesn't change anything for me.
On one hand, by issuing a dividend, Apple may attract a wider-investor base, which could favorably affect the supply-demand balance for the stock.
However, there's still a part of me that wishes Apple would have ignored outside pressures to continue going its own way, since that independent streak has been a key factor in its success.