Apple Announces $2.65 Stock Dividend & Stock Buyback [Update]

Apple announced a shareholder dividend and stock buyback program on Monday, ending years of speculation on what the company would do with its ever-growing cash hoard. The company announced just ahead of a press conference for the plan that it will initiate a US$2.65 per share quarterly dividend and a $10 billion share repurchase program.

Apple to pay shareholder dividendThe dividend will begin “sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012,” while the share repurchase plan will begin in fiscal 2013, which begins this year on September 30th, 2012.

The buyback program is expected to take place over three years, and Apple said that its chief purchase was to simply neutralize, “the impact of dilution from future employee equity grants and employee stock purchase programs.”

“We have used some of our 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 all of these in the future,” Tim Cook, Apple’s CEO, said in a statement. “Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program.”

“Combining dividends, share repurchases, and cash used to net-share-settle vesting RSUs, we anticipate utilizing approximately $45 billion of domestic cash in the first three years of our programs,” Peter Oppenheimer, Apple’s CFO, said. “We are extremely confident in our future and see tremendous opportunities ahead.”

At today’s share price, Apple’s buyback program would eliminate some 17.1 million shares from the open market. The realistic number of shares will be lower, however, with the assumption that the company’s stock price will continue to rise. $10 billion just doesn’t go as far as you think it will.

With Apple’s plan that these shares will neutralize stock option grants and other stock-based incentives, it isn’t likely to have a significant impact on AAPL’s share price.

Apple currently has 932.4 million shares outstanding. With a dividend of $2.65 per share, the company is planning on paying out some $2.47 billion per quarter to shareholders.

Check out our live coverage of Apple’s press conference for more information.

[Update: Article updated with additional information and details. - Editor]

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.