Apple (NASDAQ:AAPL) has decided to pay shareholders a dividend for the first time since 1995, making use of the company’s $98 billion cash stockpile. Apple on Monday set a quarterly dividend of $2.65 per share, from July, and said it will buy back up to $10 billion of its own shares, beginning in fiscal 2013.
“Frankly speaking, it’s more than we need to run the company,” Cook said of the $98 billion in cash and securities at the company’s annual shareholders meeting in February, signaling that Apple was likely to return some of it to investors in the near future. Some had expected the company to share the wealth through a share buyback, fewer considered a stock split, but a dividend has long been thought the most likely option for Apple to pursue.
Today the Cook surprised more than a few with the decision to both buy back shares and pay a quarterly dividend. The share buyback program is expected to be executed over three years, with the primary objective of offsetting the impact of employee stock options and equity grants.
Apple last paid a dividend in 1995. The following year, the company posted a net loss of $816 million. Apple was on the brink of extinction in 2001 when the iPod revolutionized the music industry and revitalized the company. The decision to issue a dividend opens up the stock to a whole other class of investors, and expectations for such a decision have helped drive recent gains in the stock’s share price, which touched $600 on more than one occasion last week.
Aside from issuing dividend payments and executing a buyback, Apple will will continue to use its cash stockpile to invest in research in development, according to Cook. “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,” Apple’s CEO said in a statement.
The company said it anticipates using around $45 billion of domestic cash in the first three years of its programs.
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