Apple’s announcement of its first dividend in over a decade on Monday sent its already-lofty stock even further upward this week. Apple last issued a dividend from 1987 to 1995, not so coincidentally, during the period in which founder Steve Jobs was absent from the company. Now, stockholders can expect to get $2.65 a share each quarter for the foreseeable future. Paying out the dividend doesn’t figure to slow Apple down very much. The first year’s payout will cost the company roughly $10 billion. Meanwhile, over its last fiscal year, Apple’s cash hoard grew by $31 billion.
See also: The Apple Blowout
It’s not unusual for high-tech companies to refrain from offering dividends. Fast-growing companies generally don’t pay out dividends until they become settled, profitable businesses, so there’s some sense among tech companies that only those that are past their primes pay out dividends. Google, for example, doesn’t pay a dividend, even though it has roughly $45 billion in cash on hand. Amazon.com, Dell and eBay also don’t pay dividends.
The positive reaction to Apple’s dividend may help prod those companies into thinking about rewarding shareholders with some of their profits. But even more significant, the equity landscape looks very promising for dividends to grow right now. Even though by some measures, dividends are at record levels, there appears to be more room for expansion.
Apple is famous as a high-tech trend-setter, both as an electronics manufacturer and as an iconic stock, but in the realm of dividend-payers, it’s just getting on the bandwagon. According to projections compiled by S&P Capital IQ, the amount paid out by dividend stocks may break $263 billion this year. The previous record was $253 billion in dividends, back in 2008.
Standard & Poor’s estimates that announced dividends for companies in the S&P 500 suggest an average payout rate of $29.02 per index share. That’s a record for that figure. The highest number previously recorded was $28.96 in June 2008, just before the market crash. Dividend payouts bottomed out little more than a year later, in August 2009, when the dividend level reached $21.44. The biggest reason for that drop was the financial sector, which accounted for 30 percent of all of the S&P 500′s dividends as recently as 2007. They now contribute just 13 percent of them.