TAX LAW BRINGS BILLIONS TO APPLE SHARE HOLDERS
SAN JOSE, Calif. — Apple’s tax break on its overseas profits is turning into a $ 102 billion boon for shareholders.
The iPhone maker is raising its quarterly dividend by 16 percent to 73 cents per share, matching the largest increase since Apple restored the payment under shareholder pressure six years ago. Raising the dividend by 10 cents per share will cost Apple an additional $ 2 billion annually, based on its current outstanding stock.
Apple also will spend $ 100 billion more buying back its stock, a move that will enrich shareholders by helping to drive up the company’s stock price. It also reduces the number of shares trading, which increases earnings per share — a key yardstick for measuring a company’s outlay.
Tuesday’s announcement marks the first time that Apple has provided a glimpse into howmuch its shareholders will benefit from a sweeping overhaul of the U. S. tax code championed by President Donald Trump and approved by Congress late last year.
A provision in the package temporarily lowered the taxes that companies pay when they bring cash stashed overseas back to the U. S. That rate was cut to 15.5 percent, far below the 35 percent that would have been imposed before.
No company benefited more from the tax break on overseas cash than Apple, which had accumulated more than $ 250 billion outside the U. S. during the past decade, thanks to the immense popularity of the iPhone and other products.
Apple CEO Tim Cook had made it clear all that money would be left overseas if the tax on foreign profits wasn’t cut. Now, the Cupertino, California, company is bringing most of the money home in a move that will generate a $ 38 billion tax bill for Apple and a windfall for shareholders.
Lawmakers have been hoping Apple and other companies would use the overseas cash to create more jobs in the U. S. and spend more on other projects that will help accelerate economic growth.
Apple previously promised to hire 20,000 more workers during the next five years, including some at a planned new campus in a still- to- be- identified U. S. city outside California.
The company plans to spend $ 10 billion opening and expanding data centers in the U. S. and another $ 20 billion on other longterm projects, but it’s unclear how much of that Apple would have spent anyway.
It’s also difficult to quantify how much of the repatriated money is being funneled to shareholders. Apple already has been raising its dividend and spending on buybacks every year since 2012; it’s not known how much of the new increase would have happened regardless of the tax break.