Good News From Apple
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.