“Firms should reinvest internally when it’s their best use of capital, and they should pay it out to investors when it’s not,” said Laurie Hodrick, a visiting finance professor at Stanford University who studies how corporations use their cash.
Mr. Maestri, Apple’s finance chief, said Apple invested an appropriate amount in its business before deciding how much to return to shareholders. Over the past two quarters, Apple’s spending on research and development increased 15.7 percent to $7.85 billion. “Certainly making investments that are not productive are not good for anybody,” he said.
When it repatriated its cash under the new tax law, Apple paid $43 billion less than it would have under previous rates, bigger savings than any other American company, according to the Institute on Taxation and Economic Policy, a research group in Washington. Apple has also saved billions of dollars under the lower corporate tax rate. Apple says it is spending billions in the United States, hiring new workers, building data centers, expanding offices in Texas and investing in some outside manufacturers.
For many big companies like Apple, stock buybacks also support higher compensation for employees, since so many of them are paid in part with company stock, said Ed Yardeni, president of the stock market research firm Yardeni Research.
Companies in the S&P 500 bought back a record $806 billion in stock last year, up from $519 billion in 2017, according to data from Howard Silverblatt, senior index analyst for S&P Dow Jones Indices.
Apple has returned the largest amounts to shareholders in history, Mr. Silverblatt said. From 2014 through 2018, Apple bought back $229 billion in stock, or more than the value of Home Depot, the 18th most valuable company in the S&P 500.
Over that period, Microsoft was second in stock buybacks, with $66 billion, according to Mr. Silverblatt. Apple accounted for seven of the eight largest quarterly stock buybacks in history, including the latest quarter, Mr. Silverblatt said.