I guess my initial reaction to Apple's announcements is mixed. I think the dividend raise is a little on the lean side, all things considered. As I calculate it, 2014 will have $12.92 in dividends, compared to $11.80 for 2013. That is an increase of 9.49 percent. Not bad at all, but considering AAPL's cash pile, huge cash flows, and low payout ratio, I'd have liked to see a little stronger raise. I understand this may have been tricky given how much cash is held overseas, though.
The buyback increase -- from 60 billion to 90 billion -- could play out a number of ways. If it brings the share count down in a meaningful way, it could be a solid move, but is certainly less direct than a larger dividend raise.
The 7:1 stock split in my opinion is very welcome and long overdue. Of course I understand that on one level it is just hocus-pocus and does not change anyone's financial position. But I also know that some studies show that stocks tend to perform well after splits. And I know that there is a lot of opinion and emotion around AAPL's share price, and that it has been range-bound for a long time now. With luck, the split will act as a bit of a reset, and folks will stop obsessing over whether or when the price will repeat its high over $700.
Overall, I'd say that it is a nice set of announcements. And I'm looking forward to new products and excitement about the company in the second half of the year.
EDITED TO ADD:
Huh. Just did a little math. The new dividend is a round multiple of seven (3.29 divided by 7 is .47). I'm sure that's no coincidence.
The buyback increase -- from 60 billion to 90 billion -- could play out a number of ways. If it brings the share count down in a meaningful way, it could be a solid move, but is certainly less direct than a larger dividend raise.
The 7:1 stock split in my opinion is very welcome and long overdue. Of course I understand that on one level it is just hocus-pocus and does not change anyone's financial position. But I also know that some studies show that stocks tend to perform well after splits. And I know that there is a lot of opinion and emotion around AAPL's share price, and that it has been range-bound for a long time now. With luck, the split will act as a bit of a reset, and folks will stop obsessing over whether or when the price will repeat its high over $700.
Overall, I'd say that it is a nice set of announcements. And I'm looking forward to new products and excitement about the company in the second half of the year.
EDITED TO ADD:
Huh. Just did a little math. The new dividend is a round multiple of seven (3.29 divided by 7 is .47). I'm sure that's no coincidence.