Analysts react to Apple’s dividend and share buyback plans

Philip Elmer-DeWitt reports for Fortune on various analysts reactions to Apple’s plans to initiate a dividend and share repurchase program commencing later this year.

Subject to declaration by the Board of Directors, Apple plans to initiate a quarterly dividend of $2.65 per share sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012.

Additionally, Apple’s Board of Directors has authorized a $10 billion share repurchase program commencing in the company’s fiscal 2013, which begins on September 30, 2012. The repurchase program is expected to be executed over three years, with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs.

• Jefferies’ Peter Misek: Dividend and buyback bigger than expected. We reiterate our Buy. Price target: $699.
• Piper Jaffray’s Gene Munster: Dividend achieves primary objective of expanding shareholder base. Maintain Overweight rating and $718 price target.
• Merrill Lynch’s Scott Craig: Capital development a step in the right direction; Buy. Maintain Buy. Price target: $610.
• FBN’s Shelby Seyrafi: AAPL has the wherewithal. We retain our Outperform rating and raise our PT on AAPL from $730 to $760.

Read more in the full article here.

Related articles:
Apple: Good start; and what about the overseas cash? – March 19, 2012
Apple announces plans to initiate dividend and share repurchase program; expects to spend $45 billion over three years – March 19, 2012

20 Comments

    1. What that means to you and every other Apple share holder is that when the bears try to short AAPL for days, Apple will be their to buy the AAPL share that are on sale. A few billion dollars from Apple can put a short squeeze on the shorts the next time. Think before you short AAPL because Apple has the biggest war chest. Short HP, Dell or some other sad stock loosing market share to Apple next time!

      1. I hadn’t even thought of that.
        Apple could potentially end the short-seller’s roller-coaster by acting as a very large counterweight in the market.

        Apple’s $10 billion buy-back fund has deeper pockets than any other trader in the AAPL market. (And as Cook says, it’s continuously re-evaluated — meaning it might be more in the future)

      1. Slower growth isn’t a part of this equation.

        Traditionally corporations start offering dividends to shareholders when they move from a period of high growth (and thus the need to continuously re-invest) to a period of stable predictable cash-flow.

        In this case I think what we’ve seen is Apple has moved to stable predictable cash-flow well before the growth has leveled-off.

  1. Does it not seem odd. “Price target: $610” It is only 1.7% higher than the $600 that AAPL has touched. Really, Apple has no growth past where it is now. Does anyone really listen to this person?

    This is like the $270 price target on Yahoo’s web page at http://finance.yahoo.com/q/ao?s=AAPL+Analyst+Opinion Did that person die? We past their $270 long ago. And $610 is the next joke not worth repeating.

    1. $270 = Ed Zabitsky. He’s been on CNBC a lot in the last month, saying that Apple will topple as HTML5 will mean the app economy slows! Can you believe what a fool he is? Look up CNBC’s video on the guy, he’s hilarious.

  2. P.E.D. has lost a lot of credibility points with me when he was cheering on Mike Daisey before the unveiling of the fraudster. When you’re not riding the coattails of Asymco’s insights, just stay on your area of “expertise” — the AAPL aspects and such financial reporting — would be my advice.

    Apple fans have long term memories, and we don’t forget our friends and those who feel obligated to announce/predicate their blog/opinions “from outside the RDF” as a cheap shot to some misguided credibility claims.

      1. You’re right, KenC. I think I may have overreacted a bit; many of P.E.D.’s Apple related contributions have been solid and appreciated by the community. I would, therefore, in the spirits of This American Life and NYT, redact all or parts of my criticism on P.E.D.

        The worst thing that might be evident from these (mistrusting the Jobsian RDF and giving free passes on Daisey) is that he may not the best judge of characters. And there are worse crimes to be guilty of. Due and sincere apologies.

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