Apple announces $100 billion stock buyback

It’s hard to think of a bigger corporate cash-machine on the planet than Apple, which has reported another earth-shaking $100 billion in stock buybacks for its shareholders.

Like a bottomless ATM, the Cupertino, Calif., tech giant has delivered $275.2 billion to its shareholders in dividends and stock repurchases over the past 6 1/2 years as the iPhone has become the dominant mobile communications device in the world.

The company spent $22.8 billion buying back its shares in just the first three months of 2018, a record for a U.S. company. Apple is responsible for nine of the 20 largest quarterly stock buybacks in S&P history.

Thought of another way, the $22.8 billion Apple spent on its first quarter stock buyback is enough buy any of 275 companies in the Standard & Poor’s 500-stock index.

Not only that, but Apple last week announced plans to buy back another $100 billion in stock into the future, although it did not set a specific time frame.

Apple also said it is raising its dividend from 63 cents to 73 cents per quarter — or about $2.03 billion annually. Because of its size and the number of shares, Apple pays more in dividends — $14.8 billion annually — than any company in the S&P 500. All told, the S&P companies currently spend $448 billion a year in dividends, according to Howard Silverblatt, a senior index analyst with S&P Dow Jones Indices.

“Apple is the poster child for returning value to shareholders,” Silverblatt said.

Critics are in a lather over that kind of financial force, especially in light of the ongoing debate over the uneven distribution of wealth in the United States.

Sen. Tammy Baldwin, D-Wis., earlier this year introduced legislation that would end the ability of corporations to buy back their stock on the open market, though repurchases through tender offers that are subject to greater disclosure requirements would still be allowed.

Unlike dividend payments, which register as income and have immediate tax consequences, stock buybacks offer a big upside for shareholders. Think of a pizza redivided from eight slices to six. It is still the same size pizza, but your slice just got bigger because there are fewer slices. The shareholder doesn’t pay taxes until selling the shares, which could be years.