What's Up With Apple: More Dividends, Buffett on Buybacks, Golden Globes

Technology

Published: March 1, 2021 8:13 am

At its annual shareholders’ meeting last week, Apple Inc. (NASDAQ: AAPL) CEO Tim Cook told shareholders that Apple would be increasing its dividend. If the company holds true to form, that should happen at the end of the current fiscal quarter.

Over at Forbes, Chuck Jones wrote that since Apple began paying dividends again in 2012, “it almost certainly planned on a multi-year, if not multi-decade plan of increasing it every year.” An obvious outcome: admission to the elite group of Dividend Aristocrats, companies that have increased their dividends for 25 consecutive years. Apple now has eight down and 17 more to go.

Whether Apple is looking to join the Dividend Aristocrats is arguable. What is not is that the company declared months ago that it intends to be cash neutral at some future time. That means that Apple’s total debt will be equal to its total cash. To meet that goal, the company needs to spread around a cash pile of $84 billion (as of December 2020), according to analysts at Loup Ventures.

Annual dividend increases are one way to dole out cash to shareholders, and share buybacks are another. In his letter to shareholders on Saturday, Warren Buffett talked about the value of Berkshire Hathaway’s investment in Apple (it owns 5.4%) and the power of stock repurchases.

According to Buffett, “Our cost for [our stake in Apple] was $36 billion. Since then, we have both enjoyed regular dividends, averaging about $775 million annually, and have also – in 2020 – pocketed an additional $11 billion by selling a small portion of our position.” That original stake in Apple amounted to around 5.2%. The conglomerate’s current 5.4% stake was “costless” to Berkshire.

Even better for shareholders, Buffet said, is that Berkshire Hathaway repurchased its own shares during the 2.5 years between 2018 and now and that shareholders now “indirectly own a full 10% more of Apple’s Assets and future earnings” than they did in 2018. As Buffett puts it, “The math of repurchases grinds away slowly but can be powerful over time. The process offers a simple way for investors to own an ever-expanding portion of exceptional businesses.”

Finally, Apple TV+ won a Golden Globe award Sunday night, its first, when Jason Sudeikis was named Best Actor in Ted Lasso, a comedy TV series. That’s a long way from the 10 awards won by Netflix-produced shows, but it’s a start.

Disney took home the second-most awards with five, including Best Film Drama for “Nomadland,” which debuted at the same time in theaters and on Hulu, Disney’s streaming service for material aimed at an older audience. Amazon Prime Video won three awards, including Best Comedy Film for “Borat: Subsequent Moviefilm.”