Apple (AAPL) stock was rising on Sept. 14, after taking a 5.8% hit on Tuesday after the disastrous numbers for inflation. As of mid-day Sept. 14, AAPL stock is back up to $155, after falling from $163.83 on Sept. 12 and ending Sept. 13 at $153.84.

One reason for the rebound could be that the company is always buying back large amounts of shares. As a result, the shares have a base layer of demand. The stock buybacks also provide other benefits to shareholders.
 

Apple Stock Buybacks

In the last 9 months, Apple has bought back almost $65 billion of its shares. In fact, during the June quarter, the company spent $24.562 billion on share repurchases. That works out to an annual rate of about $100 billion annually.

That means that the company has a buyback yield of about 4.0% since its market capitalization is $2,490 billion (i.e., $2.49 trillion). This also works out to a large percentage of its daily trading volume.

For example, Barchart indicates that the average daily trading volume is 75 million shares. So at $155 per share that works out to $11.6 billion or just over $1 trillion per quarter. Therefore, the $25 billion in share repurchases per quarter works out to just under 2.5% of its average daily trading volume per quarter.

This helps provide a base level of demand helping to push up the stock price.
 

Effects Of Buybacks

There are other reasons why the buybacks are helpful to the stock price. For example, over time the number of shares declines and this helps increase the earnings per share, given the same level of net income.

In addition, the dividends per share also increase over time, for the same level of dividends paid out by the company. We can see this in an example as shown in the graph I have prepared below.

Dividends Per Share vs. Dividends Cost - AAPL - Mark R. Hake, CFA

This shows that in Q4 the dividend payments were $3.539 billion, but by Q2 2022 it was $3.81 billion. That represents a growth rate in dividend payments by Apple of 7.69%. However, compare that to the actual dividends per share paid out.

This graph shows that the dividends grew from 19.25 cents per share (after stock splits) to 23 cents in the latest 2 quarters (the Aug. payment is not yet accounted for until Q3 financials). This represents a 19.5% growth rate over the same period. 

In other words, since the number of shares has declined the dividends per share (DPS) grew faster than the dividend payments. In this case, in just under 3 years, the DPS grew by 2.5x the dividend cost.

This provides significant value to shareholders over time. That is why so many companies like Apple buy back shares, especially in times like today when the stock is on sale.

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