According to market capitalization, Apple, the most significant technological company in the world, may have just reported a record quarter with a net profit of $23.6 billion. The state-owned oil company Saudi Aramco continues challenging it with its large dividend.
Aramco’s Record Dividend Payout
Last week, Aramco announced a first-quarter dividend of $18.8 billion, up from $16.7 billion in the same period last year. The business, which went public in December 2019, issued its second-highest quarterly dividend ever in this quarter.
The dividend, paid to the Saudi government, is a crucial source of revenue for the kingdom, which is grappling with a sluggish economy due to the COVID-19 pandemic and a decline in oil prices. Aramco is also under pressure to maintain a high dividend payout to attract investors, especially as it faces growing competition from renewable energy sources.
However, despite having enormous cash reserves, Apple has come under fire for refusing to increase its dividend payout. The company has a cash pile of over $200 billion. However, it has hesitated to return more cash to shareholders through dividends or share buybacks.
Instead, Apple has invested heavily in research, development, and acquisitions, such as its recent $430 million purchase of artificial intelligence start-up Xnor.ai. Additionally, the company has been growing its services division, which includes the iCloud, Apple Music, and App Store.
But lately, the business’s growth rate has slowed. Some investors believe Apple has to boost the money it gives back to shareholders significantly. While Aramco’s yield is around 4%, Apple’s dividend yield, or the annual dividend payout ratio to the current stock price, is about 0.6%.
Despite these differences, Apple and Aramco are behemoths in their respective industries, and their financial results significantly impact global markets. With a market capitalization of approximately $2.2 trillion, Apple is currently the largest publicly traded company in the world. On the other hand, Aramco is the world’s largest oil producer, with a market capitalization of around $1.9 trillion.
The Future Strategies
According to Bloomberg News, the future of both businesses is questionable as the globe shifts to a low-carbon economy. Since CEO Tim Cook promised to make Apple carbon-neutral by 2030, it made substantial progress in lowering its carbon footprint. Aramco, meanwhile, has been investing in renewable energy projects, such as wind and solar, as part of its diversification strategy.
Ultimately, how well Apple and Aramco adjust to the shifting business world will determine whether the company prevails. But Aramco’s current record-high dividend serves as a reminder that, even in the era of tech titans, the oil industry’s old guard still has some tricks up its sleeve.
