Actually this not reflected in the empirical data. Studies of the data comparing longrun performance of companies with high payout to low payout ratios show sig

Actually this not reflected in the empirical data. Studies of the data comparing longrun performance of companies with high payout to low payout ratios show significantly that average companies* perform better when they retain less cash. This is counter-intuitive because a strategist would tell you that companies with more cash have more options, companies with less cash have to go through all the expense of going back to the market every time they need to make capital investments. One thing that turns out to be the factor is agency costs. Companies with large cash hoards might waste money on bad or frivolous projects or more often bad, overpriced acquisitions. In apple's case they have more cash than they can reinvest in their own business. The market could get better returns on that cash than apple can. Therefore the market will value the cash on Apple's books at discount to it's true value. The cash is discounted by apple's low sub-market rate of return on that capital and by the implicit risk that management might any day choose to do something dumb with it. Instead companies that have to go to the market more often to raise cash, that have to file more prospectuses, turn out to be more transparently run and more accountable to shareholders. In the long run managers who "have to open the kimono" more often, turn out to perform better for shareholders. When Microsoft announced the first huge one time dividend in 2003 or whenever it was, something funny happened. When they transferred X billion dollars to shareholders, their stock should also have dropped by exactly X billion dollars reflecting the value transferred out of the company. Instead their market cap only declined by 0.8X. Meaning than hundreds of millions of dollars of shareholder value was created out of nowhere. This was because the cash was worth that much more to shareholders who had a use for it than in the of microsoft who couldn't do anything with useful with it. The 0.2X was the implicit discount of the value of that cash on MSFT's books that was unlocked by setting it free. In fact because dividends are hard to take back, a dividend usual signals to the market that management have confidence in future earnings growth. Stocks usually jump on dividend announcements even though theoretically it shouldn't make a difference. That's the signalling effect. *the big caveat being that APPL famously never performs or does anything exactly like an average company.