Is Google’s Stock Split or Apple’s Dividend Stock better for investors?

Apr 12, 2012
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This week we've come to understand that Google has a plan for their investors which includes splitting the stocks they've got currently 2-for-1, this reminding the public of a seemingly similar deal put up by Apple earlier this year. In fact Google's deal and Apple's deal are both positive for the stockholder, but otherwise don't really share a whole lot of similarities. While Google's offering includes adding extra stocks to the public pool, Apple's strategy actually has them taking stocks away in the long run, creating a situation where it's less likely that the public's ability to purchase stocks wont create diluted prices.

Google's Stock Split

Google's announcement has stock owners with either A or B class stock benefitting from the deal they've revealed today. Both A and B class stock sits in the hands on normal investors as well as employees and founders. Each A or B stock a person owns will be split, they then having 2 stocks instead of 1, with 1 of the stocks still being an A or B class stock, the other being a C class stock. The C class stock is worth as much as the A or B class stock, but does not include voting rights.

Therefor a person could potentially own all the C class stock in the world would have no voting rights whatsoever. This split will have the stock on all fronts being a lot more affordable to the common person as it's currently at or around $600 per stock - expensive.

Apple's Dividend Stocks and Share Repurchases

Apple announced earlier this year that they'd begin offering quarterly dividend stocks. This means in this case that each shareholder will receive $2.65 per share they own - that equalling out to be quite a bit for those who own masses of shares - Apple will begin giving shareholders this cash sometime in the fiscal fourth quarter, that starting this July. Apple has also announced Share Repurchasing, this totaling $10 billion in shares over the next three years starting this October.

A stock repurchase here doesn't necessarily mean anything other than the fact that Apple will be buying up stock from those willing to sell it, they they folding that stock into their own collection to reduce the amount of stock in the wild. Overall, Apple expects to use $45 billion in domestic cash in the first three years for both the repurchase program and the dividend stock program.

Which is better for investors?

For those that plan on hanging on to their stocks for an extended period, it might seem at first that Apple's plan is better as they'll start receiving cash very soon. On the other hand, as Google splits their stock and allows people to sell off half of their stash with no loss in voting rights, those looking for a quick cash-out might be in better shape with the Google plan.

Either way, both companies are in fantastic shape at the moment, publicly and otherwise, that's for certain!


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