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Apple will start paying a dividend and buyback stocks

Apple’s stock price has gone up by as much as 37 percent since January with many analysts expecting a dividend to be paid especially since the death of CEO Steve Jobs. The Cupertino, CA company has announced a quarterly dividend of $2.65 a share that will take effect from July 1 of this year or the company’s fiscal fourth quarter.

News of this has sent the stock price to almost $600 which it went over for a while as well before dropping back to $592 today. The good thing for the tech giant is that it will be able to attract more investors after deciding to issue dividends. A wider range of funds will want to add Apple stock to their portfolios. For instance, “value-oriented” funds have a policy of buying stocks that pay dividends.

The reason why Apple grew a cash and securities pile of $98 billion was because Steve Jobs was always haunted by the times in the mid-1990s when the company was pretty cash strapped. But even after the dividend is paid, Apple will continue to grow its cash pile albeit at a slower rate.

The global sales of the best-selling tablet computer, the iPad, and the leading smartphone, the iPhone, have greatly increased earnings too. The annual dividend comes to $10.60 and is a 1.8 percent yield when using the stock price of Apple right now. This is not as attractive as the yield of Microsoft which is 2.5 percent or Hewlett-Packard that has a 2 percent yield, but the dividend announcement is an extra benefit for investors already enjoying the sharp increase in Apple’s stock price.