Apple will commence paying a dividend in the upcoming July-September quarter of $2.65 per share. That's an annual payout of $10.60 for a yield of 1.76% based on Monday's closing price of $601.10.
Apple CEO Tim Cook
There is precedent among some of Apple's mature technology brethren for starting small on the dividend and then cranking it up to a meaningful amount over time to bleed cash from the balance sheet. Intel is a stand out for this, now paying out more than 10 times what it did per share in 2003 as dividends to shareholders. The shares now yield 3%, the most you'll see among large cap technology stocks.
Microsoft kicked off its dividend in 2003 with an annual payout of $0.32, which has grown to $0.80. It's hardly the kind of dividend growth at Intel over the same stretch but the current dividend is good for a 2.5% yield. IBM and Cisco Systems shares yield a respective 1.5% and 1.6%.
Oracle shows a preference for holding on to its cash and it's stock yields 0.8%. As a percentage of earnings, Oracle pays out just 13% as dividends. CEO Larry Ellison has shown a penchant for making big acquisitions like he did with PeopleSoft and Siebel Systems.
Some big names in technology still don't pay dividends, Dell and EMC notably among them.
Apple's dividend payout ratio (dividends per share divided by EPS) at 30% is more in line with the 33% at Intel than the 13% at Oracle or 19% of earnings at Cisco Systems. Apple finished the last quarter with $32 per share in cash on the books and threw off $28 in free cash flow over the past year, giving it plenty of cushion to hike the dividend in years ahead if sales don't fall from a cliff.
One thing that can be said about Apple stock is that it's put on some weight. While still not at a crazy multiple given the 56% expected earnings growth from last year, Apple shares now trade for 17 times trailing earnings, a premium to the overall S&P 500 P/E of 13.
