Apple’s cash plans: dividend and $10B share buyback, spending $45B in three years

Apple finally offered up some plans for its nearly $100 billion war chest today — and it’ll likely please the company’s shareholders.

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The company announced that it will initiate a quarterly dividend of $2.65 per share starting on July 1 in the fourth fiscal quarter of 2012. It is also begin a $10 billion share repurchase program starting in Apple’s fiscal 2013, which begins on September 30, 2012. Overall, Apple expects to spend $45 billion over the next three years.

“We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future,” Tim Cook, Apple’s CEO, said in a statement today. “Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program.”

Today’s announcements fall in line with what many were expecting. By offering a dividend, Apple is putting cash directly in the hands of its shareholders. But the method has been criticized because it’s relatively inefficient, since shareholders will have to pay taxes on the dividends. Buying back stock is more tax efficient, but could end up being problematic for Apple since its stock is currently at an all-time high.

It’s also notable that Apple is only relying on its domestic cash stockpile for the dividend and share buybacks. If the company tapped into its cash reserves overseas, it would have had to hand over a healthy chunk to the U.S. government in taxes.

“Repatriating the cash from offshore would result in significant tax consequences under current U.S. laws,” Apple CFO Peter Oppenheimer said during a conference call today.

Oppenheimer said that the company is aiming to attract new investors and offset dilution from employee restricted stock. He said that Apple expects its dividend payments to be over $2.5 billion a quarter, adding up to over $10 billion per year.

Apple shares were up over $10 reaching $596.16 in pre-market trading at the time of this post.

Cook also briefly mentioned that the new iPad had a “record weekend” for sales, but he didn’t elaborate further, since that wasn’t the focus of today’s call.

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