Apple dividend

An Apple Stock Dividend Hike Could Help Set Cash Hoards Free

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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."

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What Should Apple Do with its $137 Billion Stockpile of Cash?

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Apple Inc.'s (Nasdaq: AAPL) been in the news a lot of late as its stock plunged. Meanwhile, the company sits on a cash pile of $137 billion.

When Apple stock was soaring, investors were happy. But since its stock value plunged some 35% since September, many investors have suggested Apple should share some of itsaccumulated wealth. Fund manager and investor David Einhorn went so far as to sue the company to try to force it to share more of its cash with shareholders.

Money Morning Chief Investment Strategist Keith Fitz-Gerald was asked on FOX Business what Apple (Nasdaq: AAPL) should do with its stockpile of money: Should the company pay dividends to shareholders, pursue major acquisitions or just keep its large cash position for future investments or other costs?

Check out what Fitz-Gerald and other panelists said on the FOX Business report in this accompanying video.

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5 Reasons Apple (Nasdaq: AAPL) Stock Hit a New All-Time High

Just when it looked like the Apple Inc. (Nasdaq: AAPL) success story had taken a detour, Apple stock suddenly hits a new all-time high.

AAPL shot past its previous intraday high record of $644 by reaching $648.19 during Friday's session. The close of $648.11 easily broke the $636.23 record closing price set on April 9.

Today (Monday) Apple stock is up more than 1% in early trading, reaching an intraday high of $656.35.

That's hardly what many investors expected after Apple reported on July 24 that it missed on its June quarter earnings and offered weak guidance for the current quarter.

After that Apple stock dipped into the $570 range several times before quietly starting its climb back to its previous high.

Since those lows of late July, AAPL has soared 12% -- more than twice the rise of the Standard & Poor's 500 index and almost triple the performance of the Dow Jones Industrial Average.

How can this be? Why are investors so high on a company that hasn't really done anything spectacular lately?

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New Apple Dividend Will Help Push Shares Higher (Nasdaq: AAPL)

A new Apple Inc. (Nasdaq: AAPL) dividend will make the stock even more attractive while expanding the pool of potential investors.

Apple announced Monday that starting in September, it will pay a $2.65 quarterly dividend.

Apple also announced a $10 billion stock buyback program to be conducted over three years, beginning in September.

The stock buyback was a bigger surprise to analysts. While too small to move the stock significantly, Apple CEO Tim Cook said the intent is to avoid earnings-per-share dilution from future shares issued to reward employees.

The Cupertino, CA company's enormous pile of cash and investments - over $97 billion as of the end of 2011 - had led to increasingly strident calls for an Apple dividend in recent years.

Yet despite today's investor-friendly moves, some think Apple could have done more.


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If I'm an Apple (Nasdaq: AAPL) Investor, I Want a Dividend

Now that their stock is up more than 20-fold in the last ten years, Apple Inc. (Nasdaq: AAPL) investors have had a wonderful ride.

On top of that the company has amassed a $97.5 billion cash hoard that would be the envy of any small nation.

However, as a dispassionate observer with experience of past such glorious valuations, I will tell you: If I were an Apple shareholder I'd want a cash dividend.

In fact, I think investors should certainly demand payout of at least three quarters of that cash hoard.

Simply put, a dividend is the best way for Apple shareholders to get real value out of their investment.

Here's why.

If Apple decided to pay out a $25 billion dividend per annum, allowing shareholders to benefit directly from the company's profits, it would be less likely to diversify unwisely in the future.

By receiving such a dividend, Apple shareholders would find their capital value preserved and their income increased.

However, the temptation of the $97.5 billion cash hoard would remain and management would still dream of the $100 billion acquisition that could revolutionize Apple's prospects.

That's why besides an annual dividend of $15-$20 billion (giving a 3.75%-5% yield on a $400 billion capitalization), shareholders should demand that the cash hoard itself, or the great bulk of it, be paid out to them, by a special dividend of maybe $100 per share.

By doing that, the diversification risk would be removed, and Apple would retain only enough earnings to guard against the onset of recession.

The Larger Case for an Apple Dividend

But that's not the only reason why Apple should do the right thing and start paying a dividend.

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