Over the past few years, Apple’s bank account has exploded to where they now have over $100 billion dollars at their disposal. As a result, many have long wondered just what exactly Apple is planning to do with all that cash.
For a while, the company brass explained that they were keeping it close so that they could make strategic acquisitions on a moments notice, should the opportunity arise. But it soon got to a point where Apple had more money than it really needed. And once Tim Cook assumed the reigns at Apple, he made it clear that Apple was “not religious” about holding onto its cash hoard.
And so, back in March of 2012, Apple announced plans to institute a stock buyback and pay out dividends.
Tim Cook explained at the time that Apple uses its 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 these in the future.”
At the same time, Cook added, “we can maintain a war chest for strategic opportunities and have plenty of cash to run our business.”
The stock buyback will set Apple back about $10 billion while the dividend will pay out investors approximately $2.65 per share on a quarterly basis. The dividend program will cover any shares of record owned as of Monday, August 13. And with approximately 935 million Apple shares outstanding, Apple will be spending about $2.5 billion per quarter on dividend payouts.
And just when is dividend pay out day? Today.
Over the next three years, Apple’s buyback and dividend program will swallow up about $45 billion from Apple’s cash reserves. But never fear Apple investors, as Apple will be generating more cash than it will be doling out. In other words, Apple’s cash reserves will continue to grow, albeit at a slower rate. As an illustrative example, Apple this past quarter – which investors thought was somewhat lukewarm – saw the company generate an additional $7 billion in cash.
Given Apple’s cash reserves, some have criticized Apple for not issuing more of a dividend. Still, with so much cash on hand, Apple will easily be one of the top dividend issuing companies in the US.
For those of you keeping score of such things, Apple’s quarterly dividend-paying cycle of February/May/August/November, which already represented the highest-paying cycle of the three possible quarterly calendar cycles, will further increase its lead over the other two.
What’s more, Apple made it clear that they’re not strictly tied to the $2.65 dividend/share amount and that company is open and willing to make future adjustments to said amount as circumstances change.
We’re not sure how the dividend payments will work for every brokerage company, but some people we talked to with online trading accounts are telling us that dividend payments have already started appearing in their online accounts.