Another earnings report. Another home run. Apple Inc (AAPL) reported after yesterday’s market close, a Q2 EPS of $11.62 beating analyst expectations of $10.18 by $1.44. Revenues for the quarter came in at $45.6B. As the world’s largest publicly traded company, currently with a market cap of $470B, that is quite an achievement.As a quick reference, the following chart shows the great story of Apple’s trend in revenue, earnings and book value per share. On a 10-year scale, Apple boasts a revenue growth of 38%, EBITDA growth of 63.6% and book value growth of 43.5% annualized.
But as a dividend growth investor, I am more interested in the announcement of the stock split, dividend raise and the buyback plan.
Apple has confirmed that the stock will be split 7:1 that is targeted to be completed Jun 9, 2014; which at current levels will drop the stock price around the $75-$80. This is good news for the small investors considering to add Apple to their holdings.
Apple is currently sitting on a cash pile of $151B of which $132B is kept overseas to lower its US tax bill. The company has decided to increase its buyback by an additional $30B through next year bringing the total to $90B. Carl Icahn should finally be able to calm down and get some sleep 🙂 It is important to note that the overseas cash cannot be used in buybacks and dividends unless Apple decides to pay the additional US tax on the amount.
Apple started paying dividends in 2012 and much has been written by others about how this was the turn of Apple from a growth-focused stock to a value stock. This seemed to disappoint for a majority of the day-traders and investors who are in the market for a quick buck, but that news was really music to my ears. With the initiation of dividends, Apple signaled that investors can profit while staying invested without selling the position to exit the investment before realizing any profit.
The growth in dividends seem to be at a very good pace as well. From 2012 to 2013, the dividend rose 15% and yesterday’s announcement of new dividend of $3.29 signals an 8% increase. All signals seem to point that Apple may continue to be a dividend grower for years to come.
Disclosure: None. My full list of holdings can be found here.