(CUPERTINO, Calif.) — In a major turn away from the years when Steve Jobs was in charge, Apple Inc. is finally loosening up its purse strings, announcing both a $10 billion stock buyback plan and a dividend for shareholders.
Apple’s announcement Monday morning was a cautious one, and widely expected by investors. The quarterly dividend of $2.65 a share is equal to a yield of 1.8 percent based on the current stock value. The payout by the world’s most valuable company is less than the dividend awarded by Microsoft, Hewlett-Packard and several other big tech companies.
Because of soaring sales of iPads and iPhones even with this announcement, Apple’s $100 billion horde of cash is likely to keep on growing in the future.
“A quarterly dividend will provide current income for shareholders and we also believe it will broaden Apple’s investor base by attracting new investors who don’t currently own Apple stock,” Apple CEO Tim Cook said.
The divided opens up ownership of Apple shares to a wider range of mutual funds. Many value-oriented products are not allowed to buy stocks that don’t pay dividends.
For years, Steve Jobs resisted calls to pay dividends. He used to say that the money was better used to give Apple maneuvering room, for instance by giving it the ability to buy other companies.
Cook and CFO Peter Oppenheimer reassured analysts and reporters that they have more than enough cash to grow their business.
During a conference call Cook said he doesn’t see a “ceiling for opportunities” and that “innovation is the most important objective at Apple and we will not lose sight of that.”
He added that “these decisions will not close any doors for us.”
Oppenheimer pointed out that Apple has plenty of domestic cash to go ahead with the dividend and buyback plan. When asked how Apple will be using its large overseas cash holdings, he said Apple’s position is that U.S. tax law “provides a considerable economic disincentive to U.S. companies that might otherwise repatriate cash.” In other words, Apple does not want to pay the tax.
Apple stock rose 1 percent in trading Monday morning.
Copyright 2012 ABC News Radio
Kristen Shanahan, KFOR
Chris Isidore and Robert Mclean, CNN Newswire