AAPL Expands Dividend Program to $130B, Announces 7-to-1 Stock Split

| Apple Stock Watch

Apple announced a US$130 billion expansion to its stock dividend program, and announced a 7-to-1 stock split on Tuesday. The news came on the heels of the iPhone and iPad maker's second fiscal quarter earnings where it reported $45.6 billion in earnings.

AAPL expands stock dividend program, announces 7-to-1 stock splitThe company bumped up its quarterly dividend for shareholders by about 8 percent with a per share payout of $3.29. The new dividend will be paid on May 15 for shares held on May 12. Apple also said in a statement, "The Company also plans to increase its dividend on an annual basis. With annual payments of $11 billion, Apple is among the largest dividend payers in the world."

So far, Apple has paid out $66 billion through its dividend program. Moving forward, company CEO Tim Cook said Apple will continue to increase dividends annually.

Along with the boost in share dividend payouts, Apple also announced a 7-to-1 stock split. Shareholders as of June 2 will be granted six additional shares, and trading on the new split-adjusted shares will start on June 9.

Apple announced a 2-for-1 stock split in 2000 that led to an increase in share values, and another in 2005. Investors will likely expect to see an increase again once the 7-to-1 split takes place in the next few weeks.

Apple closed on Wednesday at $524.75, down 6.95 (1.31%) for the day. The company's stock is trading after-hours at $568.27, up 43.52 (8.29%).

Comments

skipaq

7 for 1 !!! I have been expecting a 2for or 3for maybe. But 7 for 1 is gonna do some weird things with my calculations on share price.

Lee Dronick

Why did they do the split?

MacFrogger

Lee:  My guess is that they decided to do a 7/1 split because it will take the price significantly below $100/share - this is an attractive price range for many people.

One example: My Significant Other wanted to put in $10K into the stock last week, but was very disappointed that she would get less than 20 shares.  She almost decided against buying it, despite my counsel that the number of shares didn’t matter.  Like I said, almost…I’m anticipating her to come home any minute!  wink

Lee Dronick

Thanks MacFrogger.

MacFrogger

Lee:  And another reason I just discovered: At >$500/share, Apple cannot be part of the Dow Jones Industrial Average because, well, read on:

http://www.reuters.com/article/2014/04/23/apple-dow-index-idUSL2N0NF28E20140423

Dropping the price to the $75 range all but guarantees that AAPL will get added to the Dow, and you know, there are mutual funds that ONLY buy cos that are in the Dow, and yes, that will also put additional upside price on the stock.  These investor-friendly (but no-brainer) moves are ways for Tim Cook to keep the impatient morons of Wall Street off his back so he can focus on running the company the way he wants - as opposed to all the arm-chair quarterbacks who think they know better!

skipaq

Those are all good points MacFrogger. Short term there will be a lot of upward pressure on the price. The earnings forecast should add a little to that. The increased dividend will also. It will be interesting to see what the dividend will be after the split. That is a sevenfold increase if it stays the same. The other thing is the stock buy back increase. Put that in high gear and you get pressure upward after the split.

All this points to Apple returning a large amount of cash to investors. Try to imagine what will happen when Apple announces the next big thing. It is almost as if they are priming the pump for the second half of this year.

Lee Dronick

  These investor-friendly (but no-brainer) moves are ways for Tim
Cook to keep the impatient morons of Wall Street off his back

iCahn?

MacFrogger

Hi skipaq:  The dividend will also be adjusted downward after the split - it won’t stay the same per share on the pre-split basis.  The announced increase in the dividend is 8% to $3.29/share.  After the split, the stock price will go down by a factor of seven, but the dividend will also get decreased by a factor of seven.  Meaning $3.29/7 = $0.47/share.  I’m not sure whether you meant to imply otherwise, but I thought it was worth clarifying.

No matter how you look at it, this is good news for anyone - even us small investors - who own any stock in AAPL.  More importantly as we move forward, all surprises are likely to be on the upside. And better still, Sammy’s S5 is not getting very great reviews - they appear to be falling behind.

ibuck

How will this split work? Will investors who buy AAPL shares June 3 through 7th get the 7 for 1 split? If not, will that mean no one trades AAPL that week?

Or does it mean that those selling shares June 3-7 will have to forward their additional 6 shares to the buyer on June 9th?

JustCause

I wish they had done a 10 or 20 for 1, really bring the small investors back in. I’ve always thought letting a stock price go so high was a, c*ck fight thing, see how big mine is. grin  I’m looking at you Google!

skipaq

Yes, MacFrogger, I expect the dividend to be adjusted. But the only thing I’ve read is that Apple plans to keep increasing the dividend. It would be nice for it to start at .75 to 1.00 after the split.

FlipFriddle

This is great. I’ve been wanting to add to my small amount (15 shares) but at the current price I haven’t had the dough to jump in (agree with MacFrogger). Maybe I’ll cash out a mutual fund that has been doing nothing for 5 years and buy in after the split? I don’t know. I’ve had my APPL since 2001 when I bought at $15. smile Wish I had had more than $500 to invest then, but I was majorly broke and starting a new job.
BTW, not to hijack the thread, how does a financial disaster/newbie like me buy a couple of shares privately? Is there a simple online service to do so?

Lee Dronick

  BTW, not to hijack the thread, how does a financial disaster/newbie like me buy a couple of shares privately? Is there a simple online service to do so?

I bought mine online via my bank.

ibuck

Flip, check out Scottrade and Sharebuilder. Both have very low broker fees, but check to see if they have a minimum portfolio amount. Sharebuilder takes your dividends and buys more shares for you, so it’s always growing without more fees.

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