Apple Announces Quarterly Dividend, Share Buyback After Record iPad 3 Sales

Joel Anderson |

apple dividend, iPad 3, new iPadApple (AAPL) released its much-anticipated new iPad to the public on Friday, prompting a run on Apple stores and other suppliers by eager Apple-philes looking to get their hands on the most recent shiny, new toy being offered by the Cupertino, CA tech company. Some Wal-Mart (WMT) stores opened at 12:01 am to offer a limited supply of the new device, while consumers could also get the device at Verizon (VZ) stores, AT&T (T) stores, Best Buy (BBY), and the 361 Apple stores throughout America.

New Device Has Apple Eating Higher Costs

 

The price of making one of the new iPads is costing Apple more than past models. The tablet market is expected to reach 326 million units sold by 2015 according to research firm Gartner, and Apple appears prepared to do what it takes to remain in the driver seat for the market. Despite the cost of making an iPad 3 going up, the retail price remains the same. According to a tear-down by iSuppli, the cost for the parts in the iPad 3 is $364. Add in $11 for labor, and the iPad is costing Apple $375 to make, which represents more than half the $729 retail price.

Apple Expected to Announce Dividend

The future of Apple's enormous cash reserve, $97.6 billion in the company's last earnings report, has also been the source of much speculation. With the release and relative success of the new iPad, it should be growing at an even faster rate now. As such, analysts have been anticipating the announcement of either a dividend, a share buy-back program, or both in the relatively near future. Apple and Google (GOOG) remain the only two tech companies with market caps exceeding $100 billion that still do not pay a dividend.

“They should pay a dividend,” said Shaw Wu, an analyst at Sterne Agee & Leach, Inc. “This is something that large shareholders have been asking for.”

Wu, who predicts Apple will announce a dividend with a 2-3 percent annual yield, stated that Apple executives recently held a meeting to discuss plans for what to do with the cash reserve, though the company has remained mum on any future plans. Apple last offered a dividend in 1995, before it rehired Steve Jobs as CEO. Jobs long opposed offering a dividend, preferring to reinvest in growth.

Update: Apple's Announced Dividend and Share Buyback Program

After announcing that it was "thrilled" with a "record" weekend in sales for the new iPad, Apple said it would initiate a quarterly dividend of $2.65 per share. Along with a share buyback plan, the company said it will spend about $45 billion of domestic cash to create returns for shareholders. Shares of Apple popped up almost as high as 3.5 percent to over $600 in early trading. Analysts thus far have liked the move, which had been anticipated by the investment community for some time.

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Companies

Symbol Name Price Change % Volume
WMT Wal-Mart Stores Inc. 70.08 -0.26 -0.37 10,756,653
NORD Nord Anglia Education Inc. 23.79 0.77 3.34 102,063
AAPL Apple Inc. 113.95 1.83 1.63 34,402,627
VZ Verizon Communications Inc. 51.49 0.36 0.70 10,101,462
GOOG Alphabet Inc. 789.29 12.87 1.66 1,821,914
BBY Best Buy Co. Inc. 49.00 -0.31 -0.63 4,294,387
T AT&T Inc. 40.38 -0.03 -0.07 17,105,180

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