Apple’s incredible popularity with investors is partly due to its being in a particularly attractive sweet spot because it has the characteristics of a growth stock but pays dividends. The dividing line between growth and income stocks is somewhat blurred. Typically, it requires investors to choose between potential capital gains from backing a promising new prospect and a steady income stream generated by a less exciting but more reliable business.
How Much Does Apple Pay In Dividends?
Apple paid its first dividend in 1987. Holders of AAPL stock received six cents for each share they owned, and then they continued to receive payments at the end of every financial quarter until 24th November 1995. Then the payments stopped for 17 years and only resumed when Apple paid a $2.65 dividend on each share on 24th July 2012.
From 2012 to the current day, Apple has returned to the habit of paying quarterly dividends. However, the amount of cash returned to investors has declined, with the payment made on 11th November 2021 being a relatively modest $0.22 per share.
Recent Apple Dividend Payment History
Source: Apple Inc
Why did Apple stop paying dividends?
Between 1995 and 2012, Apple's management decided that retaining profits and investing in new projects would be more beneficial for the firm (and its shareholders) than returning cash in the form of dividends.
In hindsight, this appears to have been the right call. Those new projects included the rollout of iPhones, iPods, iPads, and Apple Music, which resulted in shareholders benefitting from capital gains as AAPL shares rose by more than 12,700% in value.
Apple Inc Share Price – Capital Growth In The Years It Didn't Pay Dividends
Apple Dividend Yield Over Time
The face value amount of a dividend payment is important but representing it as a percentage of the underlying share price throws up the dividend yield number. A small dividend payment ($1) on a low-priced stock ($10) can, in percentage terms, be a better return than a more significant dividend ($5) on a higher-priced stock ($100).
Apple Share Price 2021 – Different Entry Price = Different Dividend Yield
As the last three dividends of 2021 were all of $0.22, investors who bought AAPL stock for $119 in March 2021 locked in a better dividend yield than those who bought AAPL at $159 in November of that year.
|Year||Year-End Yield||Average Yield||Max Yield||Min Yield|
Source: Seeking Alpha
Over the last ten years, the average yield on Apple stocks has ranged from 0.51% to 2.10%, which doesn't put them in the same category as outright dividend stocks but is a nice-to-have return that has been above banks savings rate for much of that time – not forgetting the phenomenal capital growth over the same period with Apple stock moving from the region of $16 to $180 per share.
How Often Does Apple Pay Dividends?
Apple pays all its dividends in cash form and every quarter. The decision on whether to pay a dividend, the amount and the exact date of payment is at the discretion of the firm's senior management.
Clarification of exactly when Apple pays dividends involves keeping up to date with market reports and company announcements.
Some companies offer shareholders the option of taking dividends in the form of additional shares of approximately equal value to the cash pay-out. Whilst Apple doesn't offer scrip or DRIP (Direct Investment Plans & Dividend Reinvestment) option, firms on this list of trusted brokers allow clients to automate the process and convert the Apple cash payment into more Apple stock.
Price charts show a dramatic long-term increase in the value of Apple stock, but reinvesting dividends would have resulted in even more impressive returns. Not only did those stocks rise in price by an amount greater than the cash pay-out, but at the next dividend date, they would have been recorded as being eligible for dividends themselves.
Previous performance isn't a guide to future share price activity, but this snowballing of assets is associated with the most impressive and sometimes exponential stock market returns over the past decades.
Apple's Cash Pile
Apple's dividend payments come about thanks to the firm's incredible profits. Year-end results for 2021 showed Apple generated $104bn in cash from operations and a further $75bn in the form of unlevered free cash flow. The company's financial statements of 25th September 2021 break these items out on the balance sheet as cash and cash equivalents of $34.94bn and $27.79bn held in the form of marketable securities, which can easily be converted into cash. There is also a position of $127.88bn in non-current marketable securities.
This enormous cash pile is an excellent problem to have, but the management is tasked with balancing the company's interests and those of different types of shareholders. Returning excessive amounts of cash in the form of dividends rewards current shareholders but could potentially disadvantage those who buy Apple stock in the future. Discouraging investors from making those future share purchases is something that Apple wants to avoid as it would result in long-term weakness in the share price.
Apple and Stock Buybacks
Stock buybacks are the process where a firm's management takes the decision to use spare cash to buy their company's shares on the open market and then take them out of circulation. Buybacks benefit shareholders thanks to the reduction in the total amount of stock supply being reduced. Following the laws of supply and demand, the price of the remaining shares increases.
Apple spent nearly $20bn on stock buybacks in Q4 of 2021, and the total repurchased in the open market in 2021 was $85.5bn. That translates to over 3% of the firm's market cap and is a higher percentage return than the 0.49% average annual yield paid in the form of dividends. Combining the two numbers results in Apple's engagement in different corporate actions generating a yearly return to investors of approximately 3.5%.
Over the past ten years, the amount of Apple shares available to investors has dropped more than 36%. With revenues predicted to continue to grow in 2022, there appears little chance of that share-price supporting process losing momentum.
Apple Dividends vs Apple Stock Buybacks
Buybacks and dividends have respective pros and cons in terms of taxation. The exact T&Cs depend on individual circumstances, but investors who pay tax on dividends received as income might prefer Apple management to engage in more stock buybacks. The net gain from the share price being supported should be in line with what would be paid out in dividends.
Other investors who can reduce their tax bill on dividend payments but would pay tax on capital gains caused by buybacks would take the opposite view of which approach they want Apple management to take.
Apple Dividend History
The below table offers a granular breakdown of Apple dividends over time. Whilst the firm continues to dominate the tech-stock sector, there appears little reason for the schedule to be dramatically altered.
Apple Dividend History – 2019 to October 2021
Dividend amounts not split-adjusted.
|October 28, 2021||November 8, 2021||November 11, 2021||$0.22||Regular Cash|
|July 27, 2021||August 9, 2021||August 12, 2021||$0.22||Regular Cash|
|April 28, 2021||May 10, 2021||May 13, 2021||$0.22||Regular Cash|
|January 27, 2021||February 8, 2021||February 11, 2021||$0.205||Regular Cash|
|October 29, 2020||November 9, 2020||November 12, 2020||$0.205||Regular Cash|
|July 30, 2020||August 24, 2020||August 31, 2020*||N/A||4-for-1 Stock Split|
|July 30, 2020||August 10, 2020||August 13, 2020||$.82||Regular Cash|
|April 30, 2020||May 11, 2020||May 14, 2020||$.82||Regular Cash|
|January 28, 2020||February 10, 2020||February 13, 2020||$.77||Regular Cash|
|October 30, 2019||November 11, 2019||November 14, 2019||$.77||Regular Cash|
|July 30, 2019||August 12, 2019||August 15, 2019||$.77||Regular Cash|
|Apr 30, 2019||May 13, 2019||May 16, 2019||$.77||Regular Cash|
|Jan 29, 2019||Feb 11, 2019||Feb 14, 2019||$.73||Regular Cash|
Source: Apple Inc
* Reflects first date shares trade on a split-adjusted basis.