Cashing In: Apple Announces Dividend, Stock Buyback

Apple finally has a plan for its giant pile of cash.

Apple Monday announced plans for a dividend and stock repurchase program for later this year. The company is currently sitting on approximately $100 billion in cash. Instead of making large-scale acquisitions as some of its competitors have done -- but which has never really been its modus operandi -- Apple will initiate a quarterly dividend of $2.65 per share in its fiscal fourth quarter, which begins July 1.

The dividend is subject to approval by the board of directors. If approved, the dividend will be Apple's first in nearly two decades.

Apple also said it will spend $10 billion to buy back its own stock over three years, starting in the company's fiscal 2013 year. Apple said the primary objective of the stock repurchase plan is to neutralize "the impact of dilution from future employee equity grants and employee stock purchase programs."

In total, the dividends and share repurchase programs will cost the company $45 billion, which is still less than Apple's total cash reserves. Apple has not ruled out using its remaining cash reserves for acquisitions; while the company has stayed away from high-priced mergers and acquisitions, it recently has made several smaller, niche purchases.

"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," Apple CEO Tim Cook said in a statement. "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 program."

"Combining dividends, share repurchases, and cash used to net-share-settle vesting RSUs, we anticipate utilizing approximately $45 billion of domestic cash in the first three years of our programs," Peter Oppenheimer, Apple’s CFO, said in a statement. "We are extremely confident in our future and see tremendous opportunities ahead."

For its fiscal 2012 first quarter, which ended Dec. 31, Apple reported revenue of more than $46 billion, up 73 percent from one year ago, and earnings of $13.1 billion, an increase of 118 percent year over year.