Apple (NASDAQ: AAPL), the world's largest company by market capitalization, has generated an impressive total return of 31% over the past year despite its sales growth stalling. One reason beyond its decade-high operating margin and gross margin is that the tech giant is returning an incredible amount of capital to its shareholders.
So, let's examine Apple's dividend, its sustainability, and another way it rewards shareholders.
Apple's dividend is growing
Apple currently distributes a quarterly dividend of $0.25 per share after the company increased it earlier this year from $0.24 per share. Year to date, Apple has paid investors $0.74 per share and will likely pay investors an additional $0.25 per share, based on its previous history, for a total of $0.99 in 2024.
Moreover, Apple management has paid and raised its dividend for 13 consecutive years. According to recent research by Hartford Funds, anytime a company grew or initiated a dividend, its stock had higher returns and less volatility compared to non-dividend-paying stocks since 1973.
Hartford Funds also highlights that a key metric for a dividend-paying stock is its payout ratio, or the percentage of a company's profits paid out as dividends. The research suggests that it is essential for a company to keep its payout ratio below 75%; otherwise, management may need to cut its dividend if its earnings slide. With a payout ratio of only 14.9%, Apple's management should be able to maintain and raise it annually for the foreseeable future.
AAPL Dividend data by YCharts
Here's what else Apple is doing for shareholders
In addition to its consistent dividend, Apple is buying back its shares hand over fist. Management has reduced its outstanding shares by 14.5% over the past five years and recently announced a $110 billion share repurchase program in May. So, while Apple's revenue and net income are only up 0.8% and 6.7% year over year through the first nine months of its fiscal 2024, respectively, its capital allocation strategy should keep shareholders happy while it finds new growth opportunities.
AAPL Shares Outstanding data by YCharts
