An Insight Into Apple's Better Than Expected Capital Return Program

Apple announced that it would increase its capital return program from $130 billion by December 2015to $200 billion by March 2017. It raised the buyback program from $90 billion to $140 billion which means dividend payments should approach $60 billion by March 2017. While some analysts had written that Apple could go to $200 billion most were in the $170 billion area. (Note that I own Apple shares).

Apple raised its buyback program from $6.3 to $7.5 billion per quarter

A year ago Apple raised its buyback program by $30 billion when it had $14 billion remaining to be spent over the next seven quarters ($6.3 billion per quarter). This year it increased the total by $50 billion when it had $10.1 billion left which should be spent over an eight quarter timeframe or $7.5 billion per quarter.

Dividend increased by 11%

Apple’s quarterly dividend increased from $0.47 per quarter to $0.52 or 10.6%. When you add up the dividends on a calendar basis it works out that the company increased it by 9.5% for calendar 2014 and it will go up by 10.0% in calendar 2015. Note that if Apple had raised it to $0.51 per quarter the increase would have been 8.5%, which is not quite as impressive as over 10% and could have been a bit of a disappointment to some investors (I had been expecting an 8% increase). Based on Apple’s closing price of $132.65 the yield is 1.6%.

Through the March 2015 quarter Apple has spent $29.7 billion on dividends. Assuming that it increases its dividend each April by about 10% next year’s dividend would be $0.59 and two years out it would be $0.64 per quarter. While the share count makes a bit of a difference at these amounts Apple would have returned around $51.5 billion in dividends of its $60 billion program.

It looks like either Apple may raise the dividend by a larger amount or has a bit of a cushion built in so that it could announce $200 billion for its capital return program. One other small boost to get to a $200 billion number was to make both parts through March 2017 vs. December 2016. Not a big deal but is an interesting optic. Source: http://www.forbes.com/