“Last month, some panic ensued when Apple’s weak guidance started fueling worries over peak iPhone sales and the future of the company’s growth. In encouraging investors to relax, I received a number of comments suggesting Apple give in to investors and massively raise the dividend at the next earnings report in late April,” Bill Maurer writes for Seeking Alpha. “While I understand those critical of the company’s dividend yield, I believe that management will continue to follow its current path that favors share repurchases over large dividend increases.”
“While Apple produces tremendous cash flow each quarter, investors know that most of these funds are located outside the U.S.,” Maurer writes. “As stated on page 29 of the company’s most recent 10-Q filing, only about $15.6 billion of Apple’s tremendous cash hoard was US based at the end of fiscal Q1. Instead of paying large tax bills to repatriate funds, Apple has decided to borrow against this hoard, a smart decision in this low interest rate environment. I recently called for Apple to issue more bonds given the recent pullback in US yields.”
“If Apple’s cash was all located inside the US, I would probably have a completely different viewpoint of this matter. But I don’t see why the company should issue debt just to pay a dividend. By repurchasing shares, Apple helps its earnings per share number and adds another bidder for shares to the market. Just imagine where Apple shares might be now if the company hadn’t reduced its outstanding share count by 700 million or so in the past two years,” Maurer writes. “With the combination of a low stock price and a yield that’s already much higher than it was a year ago, I don’t think management is going to change its course. Apple will continue to buy back billions of stock per quarter, and we’ll get a high single digits or low double digits dividend raise.”
Much more in the full article here.
MacDailyNews Take: Likely.
…..and when do share holders ( those to whom the cash belongs to) see the benifit of these 100 billion plus expenditure on their networth….( i see the tangable benifit of my dividents)..
So far not a single share holder has benefited a penny from the expenditures of these billions.
Every penny of it and more has been obsorbed by the PE. …..Unless one argues that Apple without the buyback would have been in 70$ish range… (which i doubt)
I have written before that maybe when rationality sets in, fear deminishes and pe crawls back to 15-18 ish…. we will see the benefit…
But what if rationality does not set in?
Then have these billions gone to absolute smoke?
Im am not critisizing rather questioning ..im just curios…
When does apple managment feel this expenditure will actually fill the pockets of the shareholders.. After all its all part of the program to return Apple cash to the shareholders …. Right ?
Fall prey to the altar of capitalism and you will never find the worth of anything.
Still need to raise the dividend! I vote for 6% and pressure congress (good luck) to amend the tax laws to allow repatriation of offshore funds at a reasonable rate.
Wonder what Trump’s position is on repatriation.
Raise the dividend to .78 a share, and forget buybacks it does nothing, if you want Apple shares buy it, if not buy Amazon or Netflix.
Sadly dividends will do nothing. Speculators will buy before quarterly to get dividend and sell right after.
In fact they will push prices down before quarterly so stock is cheaper.
Only if there is a way to give dividends to owners of greater than one year will this help.
Still need to do both. Reduce share number and increase the dividend. 0.78 sounds good to me. About a 3% yield on current prices.
I like the idea of Apple repurchasing shares but only up to a point. I don’t know how many shares they intend to repurchase but I hope it’s not going on forever. Stop at around 5 billion shares remaining
I’m not asking for a huge dividend but I’d like Apple to offer a slightly higher dividend than some of its tech rivals in order to at least try and attract more stable investors. I’m more interested in Apple staying around for a long time than I am for getting some quick money. I’m looking for long-term returns.
As of yet, I’m really not sure why Apple isn’t more attractive to investors than say, Alphabet or Microsoft. My reasoning my be totally off-base. It continues to languish with such a lousy P/E which I guess is based on lousy growth prospects. Maybe Apple only has to reassure investors the company does have good growth prospects. Other companies can manage that much, so why not Apple.
Bbecouse Apple PR is in a coma and has been for a while… Either by design or complacency, that i dont know…
Betteridge’s policy (not a law!) still in effect, or does MDN selectively apply that?