Apple Clears $600 a Share, How Much Higher Can it Go?

Joel Anderson |

Apple, iPad, iPad 3, iPad3, AAPLIt was only February when stock in Apple (AAPL), the Cupertino, CA technology giant, cleared $500 a share. At the time, it seemed like a fairly significant milestone. After a solid earnings report revealed excellent iPhone 4S sales driving earnings even higher and a massive stockpile of cash that was just short of $100 billion, Apple cruised past Exxon Mobil (XOM) to take the top spot as the most valuable company in the world.

However, in retrospect, the $500 per share benchmark appears to only be a stepping stone on the way higher as a mere month later Apple has broken $600 a share. Now, the sky appears to be the limit as the new iPad 3 had eager customers lined up outside of stores Friday morning when it was released. Apple announced Monday afternoon that 3 million new iPads were sold in its first weekend of availability, beating most Wall Street estimates.

Dividend, Share Buyback Program Make Already Attractive Company Look Even Better

 

Now, Apple has announced its first dividend since 1995 and a share buyback program that should delight shareholders. Of course, the over 80 percent growth in share value over the last year should have already made those shareholders more than thrilled, but now Apple has decided to add icing to its cake with a 1.8 percent dividend and a $10 billion share buy back program.

The dividend, which amounts to $2.65 per share each quarter, is a new move for Apple. Steve Jobs opposed a dividend, nixing the one offered by the company until November of 1995 after he was rehired as CEO. Jobs feared that a dividend would amount to the acceptance that Apple had peaked out in terms of growth and needed to offer cash to satisfy shareholders. However, new CEO Tim Cook was faced by increasing scrutiny as the stockpile of cash reserves at the company continued to grow to an embarassment of riches. In its last earnings report, Apple reported some $97.6 billion in cash reserves.

The Future for Apple?

Apple's dividend and share buyback are, under the circumstance, embarrassingly small by some measures. Given the pile of cash Tim Cook's sitting on, many could view the dividend as shockingly modest. However, offering any sort of incentive to own Apple shares might just be piling on. The massive growth the company's shown, over 600 percent since the start of 2009, means that any dividend is a real bonus for already rich shareholders.

However, where will Apple go from here? The company has set a very high bar for success, and if the rumors about $700 a share or $1 trillion in market cap are to be realized, it will mean Apple will have to continue consolidating gains and pushing even further, something some may view as almost impossible. Can Apple find the next big thing and continue its tradition of innovation? That is a question that can only be answered with certainty in time.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 112.88 0.17 0.15 29,873,725
ARIA ARIAD Pharmaceuticals Inc. 13.96 0.44 3.25 6,325,652
XOM Exxon Mobil Corporation 83.06 -0.39 -0.47 10,860,320

Comments

Emerging Growth

Invictus MD Strategies Corp.

Invictus MD targets companies with proven brands, strong customer focus, and significant growth potential. We not only provide capital to meet these objectives but also years of management experience from…

Private Markets

Snapwire

A peer-to-Peer authentic photo marketplace disrupting the $10B commercial photography industry.

Dropbox, Inc.

Dropbox is a service that allows their users to bring all photos, docs, and videos anywhere, and share them easily. Any file saved to Dropbox will automatically save to all…