According to the research firm, the AAPL share buyback, in which the company buys back its own shares, will help protect the US stock market as a whole.
Apple announced a significant increase in its share buybacks during last week’s income statement …
Apple has detailed its plans as the company reported record profits.
Apple also announced a $ 90 billion increase in dividends and a $ 90 billion increase in its share buyback program.
Apple’s board of directors announced a dividend of $ 0.22 per common share of the company, up 7 percent. Dividends are to be paid on 13 May 2021 to shareholders registered at the close of business on 10 May 2021. The board also authorized a $ 90 billion increase in the existing share buyback program.
Google also announced a $ 50 billion increase in its buyback program. Business Insider reports that this could have broader implications for the US stock market.
There is a spike in planned corporate share buybacks, according to independent research firm Vanda, and this should support US stocks as they trade near record highs.
The share buyback announcements exploded last week when Apple said its board of directors had authorized a $ 90 billion increase in its existing share buyback program. […]
The planned share buybacks should also help the stock market in two ways, according to Vanda Research, whose company VandaTracks keeps track of retail investment activity in 9,000 individual stocks and ETFs in the United States.
“In the event of a drawdown, corporate tables will buy shares at a reduced value, cushioning the blow from institutional selling,” Vanda Research senior strategist Ben Onatibia and analyst Giacomo Pierantoni wrote in a note released Monday.
Second, they say the net capital supply will be negative until 2021, even if the recent surge in IPOs and share placements continues. Companies in the United States issued $ 660 billion in annualized new shares through April, while S&P companies announced $ 860 billion in annual buybacks.
“As the net supply of stocks shrinks, every dollar invested in the US market will have greater marginal impact and may perpetuate the superiority of US equities,” over global equity markets, Wanda said.
In other words, if there are a lot of sales of US stock, the fact that Apple and Google will buy a significant portion of it will stop the market from falling.
Share buybacks are an efficient way for Apple to spend some of its large cash reserves as well as benefit existing shareholders. Apple effectively destroys shares as they buy back, which means that each existing share is worth more, with the dividend basket also spreading across fewer shares.
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