“Let’s face it. Dividends are nice, but they aren’t really cool,” Therese Poletti writes for MarketWatch. “Intel Corp. and Microsoft pay them. But they still are not typically associated with cool growth companies, and they certainly were an anathema to Apple’s famous co-founder Steve Jobs, who never reinstituted Apple’s dividend after he returned to the near- bankrupt company.”
“So why in the world is Wall Street clamoring for Apple — basking in the glow of last week’s “most valuable company in the world” status — to start paying one? Apple’s stock recently hit a new high of $526.29, which is up 24.15% from January and up 40.3% year-over-year,” Poletti writes. “Because its cash pile, now reaching $100 billion in cash and marketable securities, has become a mountain investors can no longer ignore.”
Poletti writes, “Under Jobs, who was perhaps shaken by Apple’s close brush with insolvency, the company has had a culture of conserving its cash… Investors though, have noticed a slight change in tone. The comments by CEO Tim Cook last week and by chief financial officer Peter Oppenheimer last month indicate that the cash pile is now also looming large with the Apple board, which is discussing its options… ‘Instituting a regular dividend would be a signal of a new maturity in the way the company views itself,” James Post, a professor whose specialities include corporate governance at Boston University’s School of Management, said. ‘That would be a much bigger statement of change for the company. I think there is probably a debate going on.’ And the ghosts of CEOs past are clearly in the room… Post said a special dividend could be an interim solution for the company.”
Read more in the full article here.