Apple has a problem that most of us would love: It has too much cash. For AAPL investors, that means massive buybacks and healthy dividends for years to come.
Apple’s operating cash flow totaled $28.6 billion in its latest fiscal second quarter (ended April 1, 2023) during which the company spent $19.1 billion buying back 129 million AAPL shares and paid out $3.7 billion in dividends to investors.
On the one hand, it’s good to be cash-rich because it gives a company plenty of flexibility to manage its businesses in the best of times by investing in innovation and staying competitive… On the other hand, having an ever-growing pile of cash on a company’s balance sheet, just collecting interest, is often seen by investors as an inefficient use of capital.
In 2018, Apple set an ambitious goal to reach a “net-cash neutral” position, in which any excess cash is balanced by its total debt. While whittling down its cash hoard through stock buybacks and dividends payouts presents a windfall for owners of Apple stock along the way, it could mean an eventual paring back of buybacks.
For now, however, Apple’s businesses are gushing cash.
At quarter’s end, Apple had a stash of $166 billion of cash on its balance sheet. After accounting for about $110 billion in debt, net cash totaled $57 billion.
Owners of Apple stock have been the biggest beneficiaries of its happy cash conundrum. The company has returned nearly $732 billion to its investors through share buybacks and dividends since the start of 2013. In that time frame its stock price has soared 952.5%, compared with 180.4% for the Morningstar US Market Index.
MacDailyNews Note: Last week, Apple’s board of directors declared a cash dividend of $0.24 per AAPL share, an increase of 4 percent, payable on May 18, 2023 to shareholders of record as of the close of business on May 15, 2023. The board of directors also authorized an additional program to repurchase up to $90 billion of the company’s common stock.
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