Apple the No.1 Dividend Payer But Not For Long
Apple (NASDAQ:AAPL) did not disappoint. The world’s most valuable company is now the largest dividend payer in the S&P 500 after boosting its dividend by 11% Monday. With an annual payout of $12 billion, Apple knocked oil giant Exxon Mobil (NYSE:XOM), which pays $11.6 billion, to the number two spot, according to Howard Silverblatt, senior index analyst, at S&P Dow Jones Indices.
However Apple’s tenure at the top of the heap may be short lived as Exxon Mobil readies a potential dividend hike on or before Thursday. “They are a [dividend] aristocrat, they have to,” Silverblatt told FOXBusiness.com. Dividend Aristocrats are companies that have increased dividends every year for at least 25 years. Exxon Mobil has a 32-year track record, including a 9.5% boost on April 30 of 2014. Silverblatt estimates Exxon would need to increase its dividend by at least 4.6% to reclaim the top spot.
The 41% drop in oil prices over the past 12-months has caused some to speculate whether big energy companies can maintain healthy dividend payouts. Exxon Mobil’s Chairman and CEO Rex Tillerson offered these reassuring comments when asked about the dividend at the company’s March analyst meeting. “We generate cash, and the question is what do you do with the cash? Our view for quite some time has been the first layer of cash goes to the shareholder through dividends. We are committed to a growing dividend,” he said. Exxon’s annual payout is $2.76 with a yield of 3.3%.”
Along with its dividend hike, Apple also ncreased its share buyback program to $140 billion from $90 billion as part of its expanded $200 billion dollar capital return program. Daniel Ives, analyst, FBR Capital Markets, described the move as the “1-2 punch” that Apple bulls were hoping for. Apple shares have gained 20% year-to-date and are sitting at a new record.