What Can You Buy With Apple’s Cash?

By | Published May 2nd, 2013

Before Apple Inc. (AAPL) declared that it would begin paying a $10.60 annualized dividend, which began in August 2012, the company was heavily criticized for having an enormous amount of cash and not returning it to its shareholders. Even after initiating a dividend, seeing a dividend yield of less than 3% was not satisfying for many investors, especially when they realized that Apple was hoarding billions in cash and long-term, marketable investments.
The accumulation of cash made investors wonder just when the company would begin to put the money to use by increasing its dividend, buying back shares, acquiring new companies, or growing organically by reinvesting in itself. In its second quarter earnings report released after the close on Tuesday, April 23, Apple said that it had $145 billion in cash; it seemed as though the company finally had to do something with all the cash or else continue to face scrutiny from shareholders. Even by billionaire standards, Apple’s mountain of cash is still very impressive as evidenced by the chart below:

Well, the question was finally answered when the Cupertino, California-based company said it was increasing its share repurchase program by $50 billion and its dividend by 15%; Apple is more than doubling its previously announced distribution plan from last year. The company now plans to pay out a total of $100 billion to shareholders through buybacks and dividends by the end of 2015.

On the surface, all seems well; the company finally caved to shareholder pressures to distribute profits to its investors. However, to partially pay for these capital return plans, Apple will issue bonds for the first time; this means that the company is essentially taking out loans, albeit at very low interest rates, to pay for these distributions plans despite having a large stockpile of cash.

If Apple was willing to take a tax hit by bringing back its cash from its overseas accounts, it could utilize its massive amount of cash to pay for these capital return plans rather than borrow money. Even more so, the company could pay shareholders a special, one-time dividend of $155 per share! To get an idea of just how much $145 billion can buy, below is a list of things that Apple could purchase with its unused cash…

UPDATE: As of Apple’s third quarter earnings report released on Tuesday, July 23, the company said it had $146.6 billion in cash. As such, here is the updated list of things that Apple could purchase with its unused cash:

*All market values are up-to-date as of July 24, 2013.

Apple Inc. (AAPL) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

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