Over the past week, Apple (NASDAQ:AAPL) announced that it will pay dividends for the first time since 1996. Investors will receive a $2.65 per share quarterly distribution starting in the third quarter of 2012. This is positive news for shareholders since the company was hoarding almost $100 billion in cash on its balance sheet.
One alternative for the cash stash would have been to spend it on acquisitions, which might not have benefited the bottom line. After all, the company has been able to go from $6 billion to $108 billion in revenues in a decade mostly as a result of innovation and offering unique products to consumers.
As a dividend growth investor, I require at least 10 years of consecutive dividend increases before initiating a position in a company. This is to protect me from investing in companies that have been able to boost distributions based on short-term economic or business events.
After all, the Motorola (NYSE:MMI) RAZR was the “cool” phone to have in the mid-2000s, and the Sony (NYSE:SNE) Walkman was the top game in town in the 1980s for listening to music. While I strongly doubt Apple will be able to increase revenues 20 times over the next decade, if it keeps innovating and delivering to its loyal following of consumers, it should do well.
Other companies in the dividend news include:
Raytheon (NYSE:RTN), together with its subsidiaries, provides electronics, mission systems integration and other capabilities in the areas of sensing, effects, and command, control, communications and intelligence systems, as well as a range of mission support services in the U.S. and internationally. The company raised its quarterly distributions by 16.30%, to 50 cents per share. Raytheon has raised dividends for eight years in a row. Yield: 3.90%.
W.P. Carey (NYSE:WPC), together with its subsidiaries, provides long-term sale-leaseback and build-to-suit transactions for companies worldwide and manages a global investment portfolio. The company raised its quarterly distributions to 56.50 cents per share. W.P. Carey has raised dividends for 15 years in a row. The company is planning on converting to a REIT later in 2012, which would lead to a higher annual distribution for shareholders coupled with simplified tax reporting. Yield: 4.90%.