Tiernan Ray reports for Barron’s, “Morgan Stanley’s Katy Huberty today opines that a higher cash return from Apple (AAPL) could be a ‘catalyst’ for the shares, writing that Apple’s projected return of free cash flow [FCF] of 36%, between dividends and buybacks, is well below the average of 68% for IT companies in the Standard & Poor’s 500 — a 6% yield, which would be an amazing $28 billion annually.”
Ray reports, “Huberty, who has an Overweight rating on Apple shares, and a $630 price target, writes that adding that additional $13 billion annually is ‘a viable option given our conservative FCF estimates assume Apple generates $21B of US FCF this year and would still end the year with $36B of US cash on hand.'”
Read more in the full article here.
“…could be a catalyst for the shares”.
Yeah, for about a nanosecond until the Robber Barons get the Ex dividend date registered. Then followed by dump the shares down to new lows.
Much better would be to let the Robber Barons cry like babies…and then buy shares back in a buyback. Resulting in much stronger shares more resilient to manipulation.
Another one who needs another layer of aluminum foil under your baseball cap. They are going to get you.
Wall $treet to Apple: All your cash are belong to us.
Try this scenario: If a masked man walked up to you with a gun and demanded all your cash, would you gladly comply because doing so “would unlock the value of your cash assets and return greater upside”?
Uh, no. Not for you, or in this case, Apple. It would mean that the company would have less capital for new inventions or acquisitions.
As an Apple stockholder, a dividend is nice. I personally reinvest my stock dividends, as the proceeds can compound over time. Generally, I try to keep all my dividend-paying stocks like Apple in an IRA to defer the tax impact until I am in a lower tax bracket before I am forced to grab my ankles.
But large institutions like Merrill-Lynch or hedge funds like David Einhorn’s live in a different world than an ordinary investor. An increased dividend payout would generate billions in income for doing nothing but using their access to CNBC to intimidate companies like Apple to give up hard-earned cash. If you read the dry quotes like those of Huberty, they seem benign. But I for one think it’s little more than a series of code words for unmitigated greed.
Simply put, Huberty, Einhorn and others like them are addicts. They have had one helluva party snorting capital gains on Apple’s ride up over the past decade. They enjoyed amil nitrate-type rushes manipulating Apple stock, shorting it to make quick, sharp gains, crushing small investors on the way down, and enjoying more money rushes as they bought more Apple stock on the cheap, riding quick profits up, over and over again.
And now this. So tell me, Ms. Huberty and Mr. Einhorn, why exactly should I trust your words? Why do you not demand that Warren Buffett open the coffers of Berkshire Hathaway and pay a rich dividend? Why not stick a gun in his face too?
Another act of desperation from a desperate, clueless Tim Cook. Only thing is, this might actually help. If you hold AAPL for the long term, and receiving a 6% dividend in the meantime, you aren’t as anxious about the price of AAPL on any given day. You might be patient to wait until the company can get itself going again under new management and hope that will bring some optimism about the company from Wall Street. As things stand now, there isn’t any because Wall Street sees NOTHING on the company’s future that will alter the current malaise.
lame
Quit wasting bandwidth and electrons. Nobody cares.
After I’ve seen the stock get pounded last year even after offering a dividend, I see another dividend as being just as useless as a catalyst to lift the share price. Wall Street has already said that Apple’s smartphone market share and profit margins are going to be destroyed, so what good is a dividend going to do, if that’s really the case. The hedge funds are nothing but leeches and parasites. They’re useless because they don’t make anything. They just move their money around willy-nilly for their own personal benefits.
As an Apple shareholder who wants to hold onto Apple stock, I’ve already resigned myself to just getting the dividend four times a year. Going by the continuously shrinking P/E and Wall Street’s firm belief Apple is done for in growth, apart from selling the stock, there’s little else I can do. I just don’t understand how a company with more reserve cash than many companies combined, Wall Street hasn’t even the slightest belief Apple will come up with some growth solution.
It’s not the fallen share price that bothers me the most. It’s more about Wall Street’s perceptions even as Apple is pulling in huge amounts of revenue and profits. It’s downright scary to think of the company’s share price continuing to collapse despite being highly profitable. I don’t buy the theory that Apple’s smartphone hardware is behind Samsung’s as long as iPhone sales continue to climb.
Well stated, rational and correct. But, do you wonder why? I did for awhile and then I saw the answer as clear as a bell. It was looking at me from a television screen. It was the face of the company’s CEO who looked like he was lost and only able to repeat phrases of the past about great products in the pipeline, or the company not sacrificing quality for price, or how the company’s numbers were (as in has been) so great. But, no hint of a clue of where to take the company next. So, I thought and am more convinced every day that the answer is, as it has been since the dawn of Capitalism, management. Our company doesn’t have very good management. Therefore our investment is at risk. Therefore we need new management. It’s that simple.
Give it up. No one cares what you think.
Yes they do. You’ll see. Just watch.
Wow.
I’m not sure that I agree with you on Tim Cook. He may not be the dynamic leader that everyone would like but it doesn’t mean that he isn’t effective. However I will admit that it would be great to have a more enthusiastic representative out there beating the drum for Apple. I don’t think anyone can deny that? Doesn’t have to be the CEO. What’s hurting Apple’s share price is uncertainty. Uncertainty going forward that is. Apple has competition that they didn’t have a few years ago. Wise investors factor that into a purchase. Investors are also looking for a catalyst to make the shareprice appreciate. At the moment there is nothing coming. When a new product or product line is announced (or at least a rumor confirmed) the stock price will jump. Sure Apple is selling stuff left and right but it’s stock in’t worth $10 per share either. The share price is $466.70 as of the close today. That ain’t peanuts! The shares had a huge parabolic run-up in August and September of last year when the stock was overbought. Too high too fast. It’s not that it’s doing poorly now, it’s that it has come down $250 per share since late September. Regardless of the entry price, those who sold at $700 are sitting pretty today. Because they’re not down $250 per share. You won’t hear any of us complaining. Only those who failed to sell at the top are hurting today regardless of entry price, as a loss of $250 per share applies to anyone still holding. In the past Apple could be as smug or arrogant as they wanted. They didn’t pay any attention to Wall Street or what investors thought. Those days are over. Tim Cook didn’t help anything at the Goldman Sachs conference. He reiterated that Apple makes great stuff. Okay. But investors need more than that. How about a breakdown on iPhone sales for last quarter? Break out the different models. No one expects any CEO to lay out a complete roadmap for their company but he could have done much more. Perhaps this is where a spokesman could come in handy. Someone needs to put a more positive spin and a less smug, haughty, arrogant attitude out there for Apple.