Warren Buffett’s Berkshire Hathaway’s Apple shares to generate $878 million in dividend income in 2024
Warren Buffett at Berkshire Hathaway’s annual meeting of shareholders on May 8, 2023
Berkshire Hathaway first bought shares of Apple in 2016. After further share purchases and a 378% increase in Apple’s stock price over the last five years, that stake is now worth about $167 billion. It is the largest investment Berkshire Hathaway has ever made in a single stock. The annual dividend payout is already huge amd should also grow into an even more sizable amount over the long term.
John Ballard for The Motley Fool:
Assuming Berkshire continues to hold 915 million shares of Apple, that stake will provide it with $878 million in dividend income over the next 12 months.
Apple has tremendous cash resources that it can invest in technology, but it’s the company’s brand that Buffett values the most… Apple’s customers are drawn to the experience of the software behind these devices, where content is seamlessly tied together through its iCloud service. This is the heart of Apple’s competitive advantage over Samsung and other smartphone rivals. While Apple controls less than 20% of the global smartphone market, it generates over 80% of the industry’s profits.
A lucrative business model provides Apple with an enormous edge in finances. It held $57 billion of net cash as of the end of September, but management is working to bring that down to a neutral cash position through dividends and share repurchases. Making the task more challenging is that a massive amount of profits floods into the company’s coffers every year. In other words, Apple has more cash than it knows what to do with.
Apple is now producing $99 billion in trailing free cash flow, which could fund a growing dividend and pave the way for new products and services that widen the company’s economic moat…
Given its low 15% payout ratio, Apple’s dividend should grow for many years.
MacDailyNews Take: Apple typically updates its dividend and buyback programs in April/May. We expect Apple’s board of directors will declare a cash dividend of $0.25 per share of the company’s common stock, up from $0.24, when it reports fiscal second quarter results at the end of April / beginning of May.
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