Apple distributes some of its cash pile through dividend and share buyback

Apple announced today that it will spend US$45 billion of its almost US$100 billion cash pile over the next three years on shareholder dividends and a US$10 billion share buyback programme.

The news ends long-standing speculation around what the increasingly cash-rich iPhone-maker will do with its cash pile after a stellar performance in its current fiscal year to date. Its free cash stood at US$97.6 billion at year-end, with some US$64 billion of this based outside the US.

But Apple said the move would not affect its ability to invest in its business or make acquisitions. “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,” said Tim Cook, Apple’s CEO. “Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business – so we are going to initiate a dividend and share repurchase programme.”

The firm plans to initiate a quarterly dividend of US$2.65 per share sometime in the fourth quarter of its fiscal 2012, which begins on July 1. This would eventually lead to payout of about US$10 billion a year, making it (he claimed) one of the largest dividend-payers in the US.

Meanwhile, the company’s board has authorised a US$10 billion share repurchase programme starting in FY 2013, which begins on September 30, 2012. The programme is expected to be executed over three years, with “the primary objective of neutralising the impact of dilution from future employee equity grants and employee stock purchase programmes."