On 19 March 2012, Apple (NYSE: APPL) announced that it would initiate paying regular dividends to its shareholders for the first time since 1995, effective with the end of the second quarter of 2012.
Beginning in July 2012, the company will pay $2.65 in cash dividends per share each quarter to each of its stockholders. Using the stock's market opening price on 19 March 2012 of $598.56 per share, just after the company's announcement was made, we calculate that the annualized dividend yield for the stock is 1.77%.
The effect of this change in the company's policy toward dividends will be felt in two ways. First, in the short term, because investors have been bidding AAPL shares upward in anticipation of the move, the immediate change will be for the company's shares should be fairly small, with the size of the move depending upon how closely investors anticipated the size of Apple's announcement - the more off they were in anticipating the actual change, the larger the effect of the announcement will be upon Apple's stock price.
As that happens, we can expect that the value of the S&P 500 index will also adjust accordingly. At least, until other new information affects stock prices!
Second, given that the company is presently the second-largest component of the S&P 500, which ranks companies according to their market capitalization, any changes in Apple's projected future dividend will have an immediate and pronounced effect upon the value of the S&P 500 index.
Just see what effect the announcement had:
And that's what now makes Apple the newest 800-lb dividend gorilla on Wall Street!
Labels: dividends, SP 500, stock market
Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:
ironman at politicalcalculations.com
Thanks in advance!
This site is primarily powered by:
CSS Validation
RSS Site Feed
JavaScript
The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.
Other Cool Resources
Blog Roll
Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.
