Apple dividend to reach Kingston pensioners’ pockets

Kingston Council’s pension fund will start pocketing around £15,500 from Apple on a quarterly basis, following the technology giant’s recent change in dividend policy.<--break->“></p>

<p>Apple’s break with the late Steve Jobs’ “no dividend” policy will see the pension fund receive $2.65 per share every three months, starting this July.</p>

<p>As Jeremy Randall, Kingston Council’s head of finance, explained, the pension fund’s holdings of Apple stock are divided between two of its three global equity investment managers.</p>

<p>The manager of the “Royal Borough of Kingston Select Global Plus” portfolio holds 9,540 Apple shares – worth over $5m – directly on the pension fund’s behalf, while the other manager holds “units” in the pooled Global Equity Fund, 3.7 per cent of which consists of Apple stock.</p>

<p>The two managers, who spoke on condition of anonymity, remained focused on the performance of Apple’s share rather than the prospective dividend income.</p>

<p>“We continue to believe that the potential for capital gain from Apple exceeds the likely dividend income shareholders will receive in the next few years,” said one of the council’s fund managers.</p>

<p>The other fund manager said: “The decision itself did not materially change our position on Apple stock.”</p>

<p>“In general, we view the dividend profile of a company as part of the mosaic of inputs into the stock buy or sell recommendation.”</p>

<p>“Apple’s performance in recent years has been driven more by the success of its products rather than its dividend payout policy.”</p>

<p>The last time Apple had announced a dividend payout was back in 1995. During these 17 years, the company has managed to hoard nearly $100bn in cash.</p>

<p>Commenting on Apple’s decision to pay dividends to its shareholders, one of the council’s fund manager’s said: “Apple had amassed a huge pool of cash which had become an increasing focus of the investment community and media.”</p>

<p>“What seems to be a larger question is whether or not Apple can maintain the strong momentum and growth it has achieved.”</p>

<p>The fund manager added: “This announcement reduces the growth rate of the cash on balance sheet and has given the market confidence in the ascribing a value to the cash flows of the business.”</p>

<p>Simon Ainley, an advisor at financial experts Holland Hahn & Wills, explained the fund’s decision to invest pensioners’ money in Apple stock even when dividend income was not on the agenda.</p>

<p>“There is always an element of risk in investments.”</p>

<p>“You have to take risks in order to achieve higher returns. This is basic capitalism,” Mr Ainley said.</p>

<p>Referring to the importance of Apple’s dividend for the pension fund, Mr Ainley added: “Dividend payouts form only a small part of the total return, which is the main concern of investors.”</p>

<p>In the weeks following the announcement, Apple’s share price recorded a short-lived 5 per cent rise to $636.2 (£393), before falling back to pre-announcement levels.</p>

<p>In addition to the dividend payout, the Californian company also outlined its share repurchasing programme, which begins this September.</p>

<p>Both schemes are expected to cost Apple a combined $45bn (£27.8bn) over the next three years.</p>

<!-- -->

<div class=

+ posts

Leave a Reply

Verified by ExactMetrics