Apple Inc. plans to pay a dividend and buy back $10 billion of its stock, returning some of its $97.6 billion in cash and investments to shareholders as demand for iPhones and iPads boosts earnings.
Investors will receive a quarterly dividend of $2.65 a share starting in the period beginning July 1, Apple said Monday in a statement. The buybacks will begin in the fiscal year starting Sept. 30 and will take place over three years, the company said.
Apple’s cash pile has swelled amid surging demand for its products, such as the iPhone and iPad. Investors had urged Apple to return some of the balance in the form of a dividend. CEO Tim Cook fueled speculation an announcement might be coming when he said this year that Apple had “more than we need to run a company,” and the board was considering its options.
“We are extremely confident in our future and see tremendous opportunities ahead,” CFO Peter Oppenheimer said in Monday’s statement. Apple said the company plans to pay about $45 billion over three years.
The dividend will cost Apple about $10 billion a year and represents a yield of 1.8% on the stock’s March 16 closing price. The company generated $16 billion in cash in the first quarter of fiscal 2012, which ended in December.
Of Apple’s $97.6 billion in cash and investments at the end of December, about $64 billion was overseas.
A dividend is a boon to investors who have already seen the company’s stock rise 45% this year. Apple co-founder Steve Jobs, who died in October, long resisted calls to return some of the money to investors.
“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,” Mr. Cook said in the statement. “Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business.”
On the conference call, Cook said adding a dividend will expand Apple’s investor pool. Some investors will only buy shares in companies that pay a dividend.
Apple last paid a dividend in 1995, before Jobs returned as CEO. The final dividend, of 12 cents a share, was suspended amid leadership upheaval and dwindling computer-market share.