Apple to raise annual dividend

Feb 26, 2016, 2:20 PM EST
Apple's iphone 6.
Source: Vikas Gupta/flickr

Apple, still embroiled in a privacy spat with the U.S. government, announced it will raise its annual dividend.

Reuters reports:

Chief Executive Tim Cook said on Friday Apple Inc (AAPL.O) is committed to raising its dividend annually, a move designed to please investors but also a sign the world's most famous technology company may no longer be a growth stock. Speaking at the company's annual meeting in Cupertino, California, Cook also said Apple was "a staunch advocate for our customers' privacy and personal safety," as it fights a public battle with the U.S. government over access to the iPhone of one of the San Bernardino shooters. Apple filed a legal brief on Thursday asking a federal court in California to throw out an order it issued last week that the company unlock an encrypted iPhone used by Rizwan Farook, arguing such a move would violate its free speech rights, override the will of Congress and jeopardize the security of other Apple devices. "These are the right things to do," said Cook. "Being hard doesn’t scare us."

Forbes writes:

Well, the simplest thing for Apple to do with its cash is to give it back. Yes, return it to its rightful owners: AAPL shareholders. In the form of a massive, one-time special dividend. Apple initiated a capital return program in August 2012, and has returned capital to shareholders with a dividend and share repurchase cocktail that has thus far yielded, by the company’s calculation, $153 billion to shareholders. Apple has about $50 billion left under its current capital return program. That program is set to run through March 2017, and the market is saying it’s not enough. Apple shares have fallen $35 since last April, destroying an astounding $200 billion in market capitalization. Something needs to be done. Apple needs balance sheet shock treatment. The special dividend I am imagining, would, in contrast to the share repurchases, be paid in one installment. That’s what I believe it will take to snap Apple out its doldrums and get the stock back into the triple-digits again. It’s misleading to say, as some pundits do, that Apple’s share repurchases have failed because the company’s share price has fallen in spite of them. The share repurchases have failed because Apple has not done enough of them.In contrast a massive, one-time special dividend would put the money in the hands of Apple’s shareholders themselves. This would allow Apple shareholders to re-invest that cash in securities that produce a higher yield than Apple’s $199 billion portfolio of securities, which produced a paltry 1.65% return last quarter. Apple could easily afford a $10 per share payment, which would total $55.4 billion at the fourth quarter’s period-end share count.

In a separate development, Ars Technica notes:

Apple's second high-profile patent win against Samsung was appealed, just as the first was. And in an opinion (PDF) published today, a panel of appeals judges entirely wiped out Apple's victory and its $120 million verdict. The new decision found that out of three different patents Apple became famous for winning with, one wasn't infringed and two of them are invalid. Appeals judges also invalidated one of Apple's most consistently ridiculed patents, the '721 "slide to unlock" patent. Jurors awarded $3 million based on infringement of that patent, but the appeals panel said the patent is invalid because of prior art.