IB Net Payout Yields Model

Good News From Apple

While the stock has been very volatile today, the news on the new capital program was very bullish. The news on the earnings front were mostly inline with the recent expectations from the market.

The massive new capital return program blows away any previous programs in the markets. Apple (AAPL) announced plans to utilize around $100B of cash in the program by the end of calendar 2015. A plan that we suggested the company implement just a few days ago (see Apple: Time To Unleash A Massive Buyback Program).

The details include approving a 15% increase in the quarterly dividend to $3.05. The increase jumps the dividend up to 3%. The company will now spend $11B on these annual payments. The biggest move though was the increase in the repurchase authorization to $60B from $10B.

Now the question is whether the company will make a substantial initial splurge with the stock trading around $400 or if it needs to borrow cash in the short-term to avoid paying any taxes on repatriating foreign profits.

The stock appears headed to closing virtually flat for the day. As a long, investors shouldn't be in a hurry for the stock to jump now until the company can load up on shares. Besides, at these levels investors now get a 3% dividend for waiting.

Disclosure: Long AAPL. Please review the disclaimer item for more details. 


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