Qualcomm’s management has stated that they intend to grow their dividend faster than earnings for the next year or so. Keeping to that promise, Qualcomm raised its dividend by 14% on Monday and announced a new $10 billion stock buyback. $10 billion is 8.6% of Qualcomm’s current market cap.
From American Money Management’s own Mike Green in Bloomberg.
“It’s a much bigger return of capital than usual,” said Mike Green, a fund manager at American Money Management LLC. which owns the stock. “The buyback was gigantic.”
Management has stated that they intend to return 75% of all free cash flow back to shareholders but this capital return program is different. Qualcomm will access the debt market to fund this capital return program because of the issues in repatriating its foreign held cash. This is what Apple (AAPL) has been doing.