Where to next for Apple Shareholders?
APPLE RELATIVE TO GOOGLE AND SAMSUNG
Cash Disbursement and Capital Allocation After months of heated debate about Apple’s capital allocation strategy and, at one point, even a lawsuit from hedge fund manager David Einhorn over the waiving of a particular resolution at the shareholder meeting, Cook finally relented and agreed to return a substantial portion of the company’s cash reserves. The company also unveiled an increase in its quarterly dividend of 15% to $3.05. At the current share price of $406, the dividend yield is around 3.0% — not phenomenally high, but certainly putting the stock in the top quartile of S&P500 constituents, and of a sufficient level that it is likely to attract the attention of income funds now. The expanded disbursements are definitely welcomed by investors, and it is a signal that the company is changing to a more shareholder-friendly stance. Adding to these two capital redistribution measures we also had the announcement that the company will also borrow money in order to return excess cash to shareholders.
“At the current share price of $406, the dividend yield is around 3.0% — not phenomenally high, but certainly putting the stock in the top quartile of S&P500 constituents, and of a sufficient level that it is likely to attract the attention of income funds now.” This is a positive from two perspectives. Firstly, it avoids disturbing the tax advantage the company has with a large proportion of its cash pile held offshore and that would trigger a tax charge in the event of its repatriation.
May 2013
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