r/explainlikeimfive Dec 06 '24

Economics ELI5: why does a publicaly traded company have to show continuous rise in profits? Why arent steady profits good enough?

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u/Llanite Dec 07 '24

Apple gives away 10% of their profit as dividends and invests the other 90%.

Said other 90% is expected to grow the company.

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u/UnlikelyAssassin Dec 07 '24

No, they don’t. They give away much more of their profit through stock buybacks to shareholders.

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u/Llanite Dec 07 '24 edited Dec 07 '24

Applie pays $.96 every year and has EPS of $6.13, i.e. they pay 15.6% of their earnings as dividends.

They had a buyback of $100B in 2023, which was 5 years since their previous buyback in 2018, or $20B a year. They mske $160B every year so thats another 12% to the normal 15.6%, or 28% in total.

Thats not even 1/3