Apple Inc.

Apple’s capital allocation is exemplary. The company consistently earns a very high return on invested capital and reinvests in areas that bolster its moat, such as significant R&D in chip design (Apple Silicon) and new product development, while keeping capital expenditures relatively low for its scale (around 2–3% of revenue).

After funding growth initiatives, Apple returns the majority of remaining cash to shareholders. In fiscal 2024, Apple returned about $110 billion to shareholders through share buybacks and dividends – one of the largest annual capital return amounts of any company.

Over the past decade, Apple has repurchased shares aggressively at opportunistic times, reducing its share count by roughly 40% (from about 26 billion in 2013 to about 15–16 billion recently). This has boosted earnings per share and reflects management’s confidence in the company’s future.

Importantly, these buybacks have been executed without jeopardizing Apple’s financial health, thanks to its abundant free cash flow. Apple’s dividend is modest (current yield ~0.5%) but steadily growing, and is easily covered by earnings.

The company has generally avoided large, splashy acquisitions, instead making smaller strategic buys and focusing on organic innovation – a discipline that has prevented value-destructive deals.

Overall, Apple’s management has a shareholder-friendly capital allocation approach: reinvest in the moat and core capabilities, and return excess capital swiftly to owners. Stock-based compensation is present but relatively conservative for a tech giant, and the impact is more than offset by repurchases.

In sum, Apple’s capital allocation skill is a major positive, contributing to long-term value creation for shareholders.