Apple just reported earnings for the first quarter of 2017, which were mixed. The company beat on EPS but slightly missed iPhone on iPhone sales and overall revenue.
However, the company announced they are increasing their capital return program and extending the timeframe by four quarters. Now the company will spend a total of $300 billion by the end of March 2019 instead of the previously announced $250 billion.
This capital is returned in the form of dividends and share buybacks. The capital return program was initiated in 2012, and has since returned $211 billion total to shareholders, with $151 billion coming via share repurchases.
Now as part of the increase Apple has increased share buyback authorization to $210 billion from the $175 billion level announced a year ago, and also increased the company’s quarterly dividend by 10.5%.
This means the next dividend payout will be $0.63 per share, payable on May 18th 2017 to shareholders of record on May 15th 2017.
Interestingly, Apple funds this program via domestic and international debt markets, instead of utilizing its massive cash board which now stands at $256 billion dollars.
This is for a few reasons – number one is that low interest rates are making debt an extremely cheap source of capital these days, and also much of the cash hoard is overseas and would be subject to a hefty repatriation tax if distributed in the U.S.
While nothing makes up for missed earning and slowing growth, this increased capital return program should buy some time from impatient investors who want Apple to make better use of its unprecedented cash hoard.
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