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Apple has just announced a dividend and a buyback.Morgan Stanley explains why investors should be happy about this
a) in the last 10 years, the top 1/3 of tech stocks ranked by dividend yield have outperformed the bottom 1/3 by 14% on average, while in more recent years, high dividend payers in tech have also traded at a multiple premium to low dividend payers,
b) most investors prefer a sustainable dividend over a buyback or a one time dividend, but importantly, AAPL is underexposed to income and yield funds compared to large cap tech peers, which means a dividend can broaden the investor base (in contrast, it is unlikely AAPL would want to boost its earnings growth with buybacks, as it reports GAAP numbers and accrues tax expense on half of its foreign earnings, which most US peers do not do).
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