The world’s biggest company just became the biggest source of dividends in the Standard & Poor’s 500 Index.
Apple raised its dividend by 10.6% to $2.08, putting it on the hook for about $12.1 billion in annual payments, according to data compiled by Bloomberg and S&P. That eclipses the $11.6 billion sent out in dividends each year by Exxon Mobil, the previous title holder.
Three years after restoring its dividend, Apple has become a company known on Wall Street as much for bequeathing cash to investors as it is for its iconic devices. The dividend boost was announced as part of an expansion in its capital return program to $200 billion, including $140 billion in buybacks.
“It speaks to the success of the brand and their product that they’re generating so much cash,” Peter Jankovskis, who helps oversee $1.9 billion as co-chief investment officer of Lisle, Illinois-based OakBrook Investments LLC, said by phone. “They still have ample cash to continue growing the company and researching and releasing new products.”
On an annual basis, Apple’s dividend went up by $1.16 billion, good for the 20th largest increase in the history of the S&P 500, according to data compiled by Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Viewed as a $9.9 billion boost in its payout, Apple’s restoration of its dividend in March 2012 was the biggest increase on record.
Apple’s $50 billion increase in its buyback authorization boosted the total repurchases announced by American companies to a record $133.6 billion in April, data compiled by Birinyi Associates Inc. show. So far this year, buybacks have amounted to almost $400 billion, with February, March and April accounting for three out of the four busiest months ever.
While Apple has been praised by activist shareholder Carl Icahn for returning cash, he’s been pushing for more. Icahn has argued that Apple is undervalued and should be trading at $203 a share, which would give the company a market capitalization of more than $1 trillion.
Apple jumped 1.8% to $132.65 during regular trading. After the company released results after the market close, the shares climbed 1.3%.
“At this point, it makes sense for them to be in the mode of listening to their shareholders and returning capital to them,” Jankovskis said. “It’s a positive development for shareholders and it reflects the maturation of the company.”
©2015 Bloomberg News