If the stock market were a social endeavor, Apple Inc. (NASDAQ:AAPL) would be the nouveau riche, or new money. While the company has $137 billion in the bank, this sum has been built up in a staggeringly fast time. In the past year alone, Apple Inc. (NASDAQ:AAPL) has generated more than $47 billion in free cash flow.
In an article comparing Apple with Exxon Mobil Corporation (NYSE:XOM)l, its big-oil nemesis for the crown of the world's most valuable company, I noted how Exxon is in a different category than Apple Inc. (NASDAQ:AAPL), having returned a staggering $265 billion to shareholders over the past decade. More than $75 billion of that amount was in dividends alone. Exxon's the old money, having existed in one form or another since 1882 and having a history of 30 straight years of dividend raises.
Yet with a very slight decline in earnings per share last quarter and a forecast for a larger fall-off in earnings next quarter, Apple Inc. (NASDAQ:AAPL) is finding investors clamoring for it to accept its new reality of lower growth and act like its old-money peers. So let's look at Apple's recent history at giving capital back to its shareholders, and what it can do with its $137 billion across the next year.
How will Apple Inc. (NASDAQ:AAPL) use its cash? Simply put, as companies generate operating cash flow, they have five main options for how to use it.
1). Spend it on capital expenditures.
2). Use it for acquisitions.
3). Return the money to shareholders as a dividend.
4). Buy back their own shares.5). Hoard it. Currently, Apple has been following the final option and has accumulated $137 billion that's managed by its Braeburn investment unit. How might the company attack the other four ways it can use its operating cash flow in the future?
How Apple's dividends stack up Apple first announced its dividend on March 19 of last year. The company announced a dividend of $2.65 per quarter, with those dividends beginning in Apple's September quarter. Along with its dividends, Apple announced a $10 billion share-repurchase program that started last quarter. With these two programs combined, Apple anticipated returning $45 billion to shareholders across three years' time.