Apple dividend is acknowledgement of investors

Apple Inc. Chief Executive Officer Tim Cook is betting that his company can keep cranking out best- selling gadgets even while paying a dividend, avoiding the fate of peers that return money to investors yet grow more slowly. Cook said yesterday that Apple will dip in to its $96.7 billion in cash and investments to pay investors $2.65 a quarter for each share owned. The Cupertino, California-based company also instituted a $10 billion share-buyback program. Dividends are often associated with companies that have matured past a rapid-growth phase and get more mileage from returning cash to shareholders than using it to generate innovative products, said Lee Pinkowitz, an associate professor of finance at Georgetown University in Washington. Apple, with a steady flow of electronics that have transformed the way people compute and communicate, is an exception, he said. “There is this view that dividends are an admission of defeat,” said Pinkowitz. “Apple is unique. It has gotten to that point as a victim of its own success. They have so much cash and are making it faster than they could spend.” Apple boosted sales 68 percent in calendar 2011, compared with 2 percent at AT&T Inc., 8 percent at Microsoft Corp. and a decline at General Electric Co. All pay dividends. While Apple is more than 30 years old, it has undergone rapid growth in recent years after the introductions of the iPhone and iPad. Since the iPhone debuted in January 2007, the stock has risen more than sevenfold. The company’s cash pile grew by 62 percent last year alone. Growth, Plus Dividends Apple, the world’s most valuable company, is attempting to heed investors’ concerns that it was hoarding too much cash while avoiding the perception that it’s no longer a growth company, said Giri Cherukuri, a portfolio manager at Oakbrook Investments LLC, which holds Apple shares. “It’s big enough to satisfy investors and for Apple to continue to maintain that it’s a growth company,” said Cherukuri. Cook said Apple will continue to thrive by expanding abroad, adding new business users and adding new customers for its line of Mac computers. “We don’t see a ceiling” for the company’s growth prospects, Cook said on a conference call yesterday. Surging global demand for smartphones will result in continued growth for the iPhone, Apple’s top-selling product, while the iPad is the market-leader in tablet sales, he said. The Mac business is outperforming the broader market, and Apple is building an enterprise sales force to lure new business users, Cook said.