Shares of Apple Inc. (NASDAQ: AAPL) added $7.14 last week (4.8%), posting a new 52-week high on Friday. The company remains the best-performing stock by a wide margin among the 30 equities that comprise the Dow Jones Industrial Average (DJIA). The company’s stock is up 34.78% year to date, well above second-place McDonald’s 19.42% improvement.
Apple reported fiscal second-quarter results two weeks ago, with earnings per share totaling $2.10 and revenues totaling $52.9 billion, pretty much in line with estimates of $2.02 in earnings per share and $52.97 billion in revenues. In the same period last year, Apple reported earnings per share of $1.90 and revenues of $50.56 billion.
Last week, the company said it would pay its regular $0.63 quarterly dividend on May 18. Apple said its total dividend payment for the quarter amounts to $3.0 billion, slightly below the $3.1 billion the company paid out in dividends in the prior three quarters.
In addition to dividend payments, Apple repurchased $7 billion worth of its own stock during the quarter. The company also reported $99 billion in total debt at the end of the second quarter.
And that raises the question of why a company with more than $250 billion in cash needs to borrow money to pay $10 billion out to shareholders. The answer, of course, is taxes. Most of Apple’s cash pile is held overseas and, under U.S. law, would be taxed if the company brought the money back into the country. That’s a whole story in itself.
Apple, and other companies like Alphabet that also keep large stores of cash offshore, often borrow to pay dividends because money is cheap, particularly if the company has a market cap of $800 billion and is the most valuable private-sector company in the world.
Last Thursday, Apple issued $7 billion in new bonds with floating interest rates and maturing dates between 2020 and 2027. Like the rest of the cash-rich U.S. firms, Apple is waiting for the president to make good on his promise to lower corporate tax rates and, perhaps, even a one-time tax holiday on repatriated funds.
Apple shares closed at $156.10 on Friday, in a 52-week range of $90.00 to $156.42. The consensus 12-month price target is $153.96, in a price target range of $104 to $202 per share. And see our story on why Merrill Lynch raised its price target on Apple last week.
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