A great analysis of Apple’s recent dividend announcement.
the AAPL announcement
Yesterday morning, AAPL announced that it will initiate a $2.65/ share quarterly dividend, starting during the July accounting period. The company says it will also repurchase $10 billion in stock over the coming three fiscal years. Together, the two moves will absorb $45 billion in domestic cash.
the stock buyback
The dividend is a more important signal about future earnings. But the description of the stock buyback also says something important, and admirable, about the company’s management.
Most firms try to describe stock buybacks an altruistic move on their part, as “returning cash to shareholders.” They argue that dividend payments create a tax liability for recipients while stock buybacks do not, and intimate that this is the main reason for their action.
The tax stuff is true. But the rest is, at best, nonsense.
Companies pay their employees, and particularly their executives, in two ways: …
View original post 691 more words