Regarded as one of the greatest investors in stock market history, Warren Buffett, Chairman of Berkshire Hathaway (NYSE: BRK.A), follows a specific set of rules when selecting his next investment. One crucial condition he considers is whether the stock pays dividends.
This focus on dividends, among other positive factors, has led Buffett to invest significantly in Apple (NASDAQ: AAPL). According to the latest filings, Berkshire Hathaway currently holds 905.6 million shares of Apple.
With Apple’s recent announcement of a dividend increase from $0.24 to $0.25 per share, Buffett, often referred to as the Oracle of Omaha, is expected to earn a substantial profit of $226.4 million quarterly, up from the previous $217.3 million.
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In addition to the dividend increase, Apple just made history
With the announced dividend increase that is set to bring joy to compound investors, Apple also decided to conduct a $110 billion share buyback program, which is the largest in the history of not just Apple but any company on the stock market.
A stock buyback occurs when a company repurchases its shares from shareholders at the market value per share, reclaiming a portion of its ownership. This method has become increasingly favored over dividends for returning cash to shareholders.
While smaller companies may engage in buybacks, larger, blue-chip companies are more likely to do so due to associated costs. Despite seeming counterintuitive to return money raised through share sales, companies may repurchase shares to reduce capital costs, consolidate ownership, maintain stock prices, take advantage of undervaluation, and improve critical financial ratios.
AAPL stock surged on positive news
Apple stock surged 5.85% in pre-market trading, building on a 2.20% increase from the previous session. The AAPL stock price today now stands at $183.16.
This turnaround comes after a year-to-date loss of 6.79%, signaling a positive shift in momentum.
Investors should stay vigilant about AAPL stock in the coming days. CEO Tim Cook has suggested that new AI features are on the horizon for Apple, which could potentially boost the company’s stock price even further.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
