Time For Apple To Change Its Buyback Playbook – Buyback Wednesdays

Last week Apple (AAPL) authorized an additional stock repurchase plan of $90 billion. This is the third year in a row the company had added $90 billion to its buyback program. This buyback represents around 3.4% of its market cap at announcement and brings its expenditure on stock repurchases to over half a trillion dollars in the past decade. In addition, Apple increased its quarterly dividend by 4% to 24 cents per share.

In fiscal Q2,2023, Apple spent $19.1 billion on share repurchases. The declining shares outstanding graph below clearly indicates that the company has been an uber cannibal by following through on its buyback announcements and repurchasing shares. Apple has retired about 16% of its outstanding shares over a five-year period and has spent a total of $573 billion on buybacks in the past decade.

The quarterly dividend increase marks the iPhone maker’s eleventh consecutive year of dividend increases since it started paying dividends in 2012. With a low dividend yield of 0.6%, the company is clearly prioritizing share buybacks over dividends to return capital to shareholders. Apple is paying out around 16% of its earnings in dividends.

Warren Buffet, CEO of Berkshire Hathaway said recently in an annual meeting that “the iPhone maker is a better company than any firm in the conglomerate’s vast portfolio”. Berkshire owns about 5.8% of Apple, a stake worth more than $150 billion. The technology titan represents a big chunk of Berkshire’s $700 billion market capitalization.

At a valuation of $2.7 trillion, or $171.77 per share, Apple is not very far from its all-time high of just over $180, becoming the first company worth $3 trillion. It has crossed the $170 mark four times in the last 2 years.

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