Apple to spend $45 billion on dividends, share buybacks

Apple plans to spend $45 billion over the next three years paying dividends and repurchasing shares. The company announced the decision earlier this morning, revealing plans for a portion of the $97.6 billion in cash and equivalents the company holds. It is the company’s first dividend since 1995.

Although widely anticipated by analysts, the company was tight-lipped about the prospect of a dividend or a buyback during Apple’s holiday quarter earnings call in January. “We’ve actively been examining use of all our cash. We’re looking for what we can do from an acquisition perspective, in the supply chain and otherwise,” said Apple’s chief financial officer Peter Oppenheimer at the time.

Starting after the company enters its fourth fiscal quarter on July 1, Apple shareholders will begin to receive $2.65 in quarterly dividends, making the yield on Apple shares about 1.8 percent.  Apple will also spend a further $10 billion over the next three years on a share repurchase program, designed to reduce the impact of employee stock programs and equity grants. The buyback program will begin after Sept. 30, once Apple starts its 2013 fiscal year.

Both the dividend and share buyback programs will use Apple’s domestically held reserves, allowing the company to avoid paying taxes on the cash it holds overseas. Overall, Apple expects to spend more than $2.5 billion a quarter and $10 billion per full year on dividend payments, which will slow, but not halt the rate the company is adding to its bank accounts. According to Asymco’s Horace Dediu, Apple has been earning cash more and more quickly, increasing its war-chest by $16 billion in the last quarter alone. Even with the dividend and share repurchase program, Dediu expects the company to add $35 billion to its cash reserves this year.

Apple shares rose 1.73 percent on the news, opening at $598.37 before slipping slightly to $596.69.