On Tuesday evening, Apple (NASDAQ:AAPL) announced the largest single share repurchase authorization in history. The company increased the size of its share repurchase program from $10 billion to $60 billion, brushing aside the previous record buyback of $40 billion by Microsoft (NASDAQ:MSFT). Below that, previous buyback heavy-hitters include Proctor & Gamble (NYSE:PG) with a $30 billion authorization in 2007, and Time Warner (NYSE:TWC) with a $20 billion authorization in 2006.
On top of the revamped share repurchase program, Apple announced that it will increase its quarterly dividend by 15 percent. Alongside the earnings release, the company announced a dividend of $3.05 payable May 16 to shareholders of date on May 13. With annual payments of about $11 billion, Apple sits comfortably in the pantheon of the largest-dividend paying companies in the world.
All told, the size of Apple’s capital return program to shareholders doubled in size. The company will be using about $100 billion to finance the initiative, and has revealed that it will access the debt markets as part of the process. This move was expected by some analysts who predicted that Apple would take advantage of cheap domestic debt in order to avoid repatriation taxes (much of Apple’s $145 billion cash-and-investment war chest remains overseas)…
Ahead of the release, and building to a climax on the anniversary of the reinstatement of its dividend a few weeks ago, many investors and analysts expressed concern that the company wasn’t paying enough attention to its dividend policies. In order to address these concerns, Apple’s board made a point of stating that it will revisit its capital return program on an annual basis — likely at the end of the first quarter.
As of Tuesday’s closing price, Apple’s $50 billion increase equates to about 13 percent of shares outstanding. Ostensibly, this plan should put a floor on Apple’s stock price, currently hovering around $400 per share.
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