Why Apple is going to increase their dividend payout next quarter

“Apple Inc. could purchase just about anything with its $122 billion wad of cash. In fact, the company has the ability to double its yield right now without even breaking a sweat. It holds that much in cash,” Jason Cimpl writes for ETFDailyNews.

“Apple’s cash hoard is enough buy all of the gold reportedly stockpiled in the People’s Republic of China. Moreover, they could even afford to sweeten the deal and pay $1,900 per ounce,” Cimpl writes. “At $1,900 per ounce, gold sells for $61.1 million per ton. China supposedly stores about 1,054 tons of gold, which has a value of roughly $64.3 billion. Apple could purchase all of PRC’s gold (for a 10% premium) and have $58 billion remaining.”

Cimpl writes, “It’s unlikely the company will begin to hoard gold. However, Apple’s cash balance has clearly reached an absurd level. The easiest (and wisest) way for Apple to spend its money would be to distribute it as a dividend. Though AAPL already yields a respectable 1.8%, its payout could be far grander. And I think Apple is going to increase their payout next quarter.”

Read more in the full article here.

38 Comments

    1. — then the world will end cause its 12/21/2012. Right??

      The original article is a total piece of crap. Not even an analyzation, just selling their articles.

      Nothing to see here…. move along… 🙂

  1. Now that I do believe. I don’t believe we will see a special dividend before the years end. But I believe that an increase in the dividend for 2013 is almost assured. The stock needs all the help it can get.

    1. We are unlikely to see a special dividend and I have to question the wisdom of those companies which have. First, it’s taking definite, expensive action against an uncertainty. Depending on how fiscal negotiations devolve, some, a few, none, most, or all will be happy to have missed some taxation. However, since the special dividend is the prepayment of next year’s dividends, starting Jan 1, 2013, the yield for those stocks will drop or vanish, eroding the value of their shares next year.

        1. Whether Apple give a special dividend or not, Wall Street will find more excuses to pummel Apple’s stock price down. The excuse will be that Apple’s cash horde has dwindled and it won’t have the financial power that it once had. Wall Street has no decorum of civilized behavior, it just sucks and drains blood dry from its benefactors and after having done so will just chuck out the lifeless carcasses into the pit.

  2. Dividend money would come out of US funds.

    However remember that payments to foreign companies for component supply and manufacturing costs can be paid from local revenue. Apple likely recycles its profits in local countries as much as possible.

  3. Still, Wall Street believes Amazon is worth much more than Apple. Unfortunately, when you have those sort of people running the stock market, anything goes. Up is down and left is right and huge wads of cash mean absolutely nothing.

    1. Cash stock piles shouldn’t affect a stock except to degrade it. I large stockpile of money is cool for you and I but for a publicly trade company it’s inrealized potential wasting away in a bank. Investing it to make it grow is better than just stockpiling it. Why would someone want to buy stock in a company that has lots of money and won’t invest it or pay it back to the investor?

      1. They wouldn’t, but you did not describe Apple since they do invest tons of money in everything from securing supplies of raw materials to owning machining equipment to mills the aluminum in their special unibody designs, along with Pre purchasing shipping to air lift their products to stores ahead of big launches.

        On the investor side they now pay a dividend and buy back stock to prevent employee stock options from eroding the share price.

        The stock market is a crazy place full of irrational heard minded lunatics, but Apple is doing everything you’d want them to from an investor point if view.

  4. Here’s my situation. Sell AAPL now, before the capital gains tax doubles, and buy PG, which pays more than double Apple’s dividend, or hang in with Apple and hope for a dividend increase? I would go to PG except that there is a corporate raider trying to bring them down.

    1. Doubles? Where do you get that? If no agreement is reached before year end, CG tax rate rises from 15% to 20%, not 30%. Assuming there is eventually a compromise, whether before or after the expiration of W Bush tax cuts, there are multiple possibilities, including maintaining 15%, going to 20% only for those making over $250K/yr, or $1M/yr. Or maybe they will settle on 17%. You don’t know. And why PG? There are many companies paying far higher yields, as well as having greater growth prospects.

      Seek better information.

  5. “Apple’s cash hoard is enough buy all of the gold reportedly stockpiled in the People’s Republic of China.”

    that is assuming the dollar doesn’t plummet in value with Obama Messiah at the helm.

  6. Apple cash reserve is what allows Apple to take risks. iPhone was a big risk. iPad was a big risk. I expect something completely new next year, and that will be a big risk. The cash is Apple’s self-insurance, to mitigate risk. Apple’s competition are risk-adverse, because the would need to “bet the farm” (take on significant debt) to do something great like create iPad (as a completely new product category). Instead, they let Apple take the big risks, then race to copy whatever is successful as quickly as possible.

    The cash also allows Apple to take advantage of bad economic conditions. 2008-2009 was bad, but we may have something worse coming up. As other companies struggle, Apple can acquire key technologies and other assets (such as new “human resource” assets) and come out even stronger and more dominant on the other side. They can continue to out-innovate the competition, while they are hunkered down in survival mode.

    Apple needs to keep the cash reserve available (not give it away) more than ever, right now. It’s Apple’s key advantage versus the competition, and something they can’t have, no matter how much they try to copy Apple.

    1. If ‘risk’ is the possibility of financial loss then having over 100 billion in the bank means that developing and launching a new product has become an insignificant risk for Apple.

      The buffering effect of that much cash means that they are the *only* company that can launch whole new categories of product without any fear at all of going down the gurgler. A few billion spent on something that sinks without trace is neither here nor there.

      1. I would agree with your comment but have to add…

        Apple’s focus on having insanely great products also means years and years of research and then killing the product. That takes money and the willingness to not “monitize the defective product” like some other MS company that shall remain nameless. LOL

        Just a thought,
        en

  7. I believe AAPL is earning more cash per year than they pay out in dividends. It would be nice if they would increase the payout to a little over 2%. It probably won’t happen very soon. Apple is rather conservative.

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