Washington - One bright spot in Apple's earnings report Tuesday was the
announcement that it will be giving shareholders more cash. The tech giant is
raising its quarterly dividend by 10.5 percent to 63 cents a share.
The cash is to be
paid out in mid-May, the company said. Apple is also buying back more of its
shares, which raises the value of its stock. Investors who own individual
shares of Apple may notice the biggest difference. But even people who don't
own individual shares of the company are likely to get a bump if they invest in
a major stock index through their retirement account or a brokerage account.
Apple is a top holding in 138 exchange-traded funds, said
Todd Rosenbluth, director of mutual fund research for CFRA Research. For
example, the tech firm is the largest holding in the widely held S&P 500
ETF, making up 3.75 percent of the fund. Apple also makes up about 15 percent
of the S&P 500 Technology index fund, a popular tech fund.
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The dividend increase has become an annual ritual for Apple,
said Angelo Zino, an equity analyst for CFRA Research. The company has been
sharing more cash with investors since it introduced its first dividend payment
in 2012, he said.
In addition to the bigger dividend payouts, Apple has been
buying back more of its shares - a move that typically raises the stock price by
reducing the number of shares in the market. Share buybacks can also be a sign
from Apple's management that it's confident in the company's future, said Brian
Colello, an equity analyst for Morningstar, a fund research firm.
A bigger dividend can be a way for Apple to keep attracting
new investors at a time when it is growing more slowly, Zino said. Smartphones
are so common now that the iPhone is no longer providing the gangbusters growth
it once did, though that could change in the next couple of years, he added.
As for cash, Apple has plenty of it nearly $260 billion.
While most of that is sitting overseas, Apple could bring more of that cash
back to the States if the Trump administration delivers on its promise to lower
the corporate tax rate.
If so, some of those greenbacks could eventually land in
shareholders' pockets, in the form of an even bigger dividend or more share
buybacks, Zino said.