NEW YORK (AP) - Apple Inc. is finally using its $98 billion cash hoard to reward shareholders, saying it's instituting both a dividend and share buyback program.
Investors' expectation that Apple would soon declare a dividend has already bolstered the stock of the world's most valuable company, driving its market capitalization to about $546 billion.
Apple said Monday that it will pay a quarterly dividend of $2.65 per share, starting in its fiscal fourth quarter, which begins July 1.
The dividend works out to $10.60 annually, or a 1.8 percent yield at the current stock price. That's below the yield of other big technology companies like Microsoft Corp., currently at 2.5 percent, and Hewlett-Packard Co., at 2 percent.
A $10 billion share buyback program will begin next fiscal year, which starts Sept. 30, and run for three years.
Apple is sitting on $97.6 billion in cash and securities. For years, it has resisted calls to reward shareholders with some of that money. Since the death of CEO Steve Jobs, management has signaled that it's been considering options for the money.
The dividend will cost Apple about $10 billion annually. That's less than the cash the company generates, so its cash levels will continue to grow, but at a slower rate.
Apple CEO Tim Cook and Chief Financial Officer Peter Oppenheimer will discuss the decision on a conference call at 9 a.m. EDT Monday.
Apple shares have risen 37 percent since Oppenheimer said on Jan. 24 that Apple's board was in "active" discussions about the use of cash. In pre-market trading, the shares rose $4.96, or 1 percent, from Friday's close to $590.53. Just before the announcement, the shares were above $600.
The dividend opens up ownership of Apple shares to a wider range of funds. Many "value-oriented" funds are not allowed to buy stocks that don't pay dividends.