An Apple Stock Dividend Hike Could Help Set Cash Hoards Free

    Text size

If Apple Inc. (Nasdaq: AAPL) actually does what many now expect - raise the Apple stock dividend as much as 56% - it could help inspire a trend of givebacks by other cash-rich companies.

Looking at the company's cash hoard of $137 billion - which could reach $170 billion by year's end - a survey of analysts conducted by Bloomberg News this week concluded that an Apple stock dividend hike of $4.14 a share is a likely possibility.

That would raise the stock's yield from about 2.40% now to a much more attractive 3.6% -
higher than 84% of the other dividend-paying companies in the Standard & Poor's 500 Index.

An increase in the Apple stock dividend would almost certainly boost the stock price, which is down about 35% from its Sept. 19 high of $702.10.

"The accumulation of cash has become excessive," Brian White, an analyst at New York-based Topeka Capital Markets Inc., told Bloomberg. "It doesn't matter which bearish scenario you forecast, they're never going to need this much cash."

Apple Stock Dividend Could Set Tone for 2013

But Apple isn't the only U.S. company sitting on billions of dollars that shareholders would like to see returned to them.

According to Moody's, cash hoards at non-financial U.S. companies rose to $1.45 trillion by the end of 2012.

Apple tops the list by far, but five other tech companies landed in the top 10.

These companies face the same kind of investor pressure to pay them off that has been directed at Apple. If we do see an Apple stock dividend in the near future, such companies will feel even more pressure to return money to shareholders.

Here are the top 10 cash kings as of Dec. 31, 2012:

  • Apple Inc.: $137.1 billion (2.40% yield)
  • Microsoft Corp. (Nasdaq: MSFT): $68.3 billion (3.30% yield)
  • Google Inc. (Nasdaq: GOOG): $48.1 billion (no dividend)
  • Pfizer Inc. (NYSE: PFE): $46.9 billion (3.40% yield)
  • Cisco Inc. (Nasdaq: CSCO): $46.4 billion (2.60% yield)
The full article is reserved for subscribers of Money Morning.
Sign up now for immediate access - it's absolutely free!

(After submitting your email address the page will refresh with the full article. You will receive a welcome email from Money Morning including the benefits of your free subscription.)