Apple seen raising dividend by more than 50% to $16 billion

“Apple Inc. (AAPL) is poised to boost its dividend by more than half, according to analysts surveyed by Bloomberg, providing investors hit by a share slump with one of the highest yields in the U.S. technology industry,” Karl Baker and Adam Satariano report for Bloomberg News.

“Apple will probably lift its quarterly dividend 56 percent to $4.14 a share, for an annual payout of $15.7 billion, according to the average estimate from six analysts,” Baker and Satariano report. “The resulting yield of 3.7 percent would be higher than 86 percent of the companies in the Standard & Poor’s 500 Index paying dividends. Apple could fund a payout with existing cash flow without using profit from overseas, which can be subject to extra taxes, said Gene Munster, an analyst at Piper Jaffray Cos.”

“Many companies announce dividend changes once a year, fueling speculation about Cook’s plans as Apple approaches the anniversary of last year’s announcement, which came on March 19,” Baker and Satariano report. “Dividend predictions from analysts surveyed by Bloomberg range from $3.31 to $5.30 a share.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]

Related articles:
If Steve Jobs were alive he’d do another buyback instead of upping dividend – March 18, 2013

19 Comments

  1. Works for me since the dividend will be reinvested and no tax to be paid yet since this is part of my retirement fund.
    I prefer this to a buy back because Wall Street has a habit of discounting effects Iike that whenever it suits them. A dividend produces a regular yield and cannot be ignored.

    1. Dividends are a horrible use of corporate cash.

      Before the first dollar is issued, the host corporation pays 35% income tax (soon to become 39%). That’s not counting State income taxes.

      Then the recipient pays an additional income tax (not everyone has their shares in a tax deferred account). Upper income recipients are taxed at an even higher rate (55%).

      So between the double taxation issue, our beloved socialist government collects more than $1.00 for each $1.00 paid out (not including State taxes).

      1. Amen! I remember when the tax rate was much less aggressive, back under good old-fashioned Republican administrations like Eisenhower and Regan… oh wait… no.
        I guess they were socialists too.

      2. Well, there certainly are better ways to use corporate cash that’s for sure. But Apple isn’t doing that.Yet. So a boost in the dividend is quite acceptable. As is buying back more shares of their own stock. Apple is in business to make money and are doing quite well thank you. They understand what profit is. They understand margin. They keep it as high as possible so they can make more money. Then they can make more cool things. It’s an endless cycle. Investors should be as prudent. Learn what profit means. When it grows take it. Otherwise you may be trying to fight your way back to break even again. Or at best trying to recoup some of that huge profit that you passed on when it was saying “take me,take me,take me”! You don’t have to get in and out of the stock constantly but you invest to make money, so don’t pass when you’re doing just that. There will be a better reentry point. Is $265 cheaper a better reentry point for you? Yeah, it was for me this morning.

      3. Dividends are a real tangible way for stock holders to realize cash for their investments. And yes you have to pay tax on that, just like any stock you make profit on.
        Apple is making a ton of cash at the moment and I prefer them to use it strategically whenever possible and not splurge on some lame-duck stock like MSFT does every year or so.
        They are also no longer considered a growth stock by the market so one approach to add value is to disburse cash to the stock holders.

      4. greggthurman, while I agree that dividends are double-taxed, your taxation analysis is completely screwed up. First of all, very few (if any) corporations or individuals pay the maximum rate. Second, you cannot sequentially tax an amount and end up paying more than 100% in taxes. It is mathematically impossible. Let’s say, for example, you start with $100 and it is taxed at 50% each day.
        Day 1:$100
        Day 2: $50
        Day 3: $25
        …and so on. It never gets to zero.

        You are so stuck on “socialism” and similar rhetoric that you don’t bother to actually think…

      5. Apple says its tax rate is around 22 – 25%, and most of us are not in a super high tax bracket so things are not so dire as you try to make them sound.

      6. @gregg – I agree with your tax analysis, but ONLY if you assume that Apple will never, ever pay a dividend.  If it does someday pay a dividend (1-2-3 years from now), then all of those taxes will have to be paid and your argument about not increasing the dividend this year flies out the door.

        Legally, a nonprofit corporation is *not a company that earns zero profits, but one that is barred from distributing its earnings to owners/founders/others.  A permanent commitment to NEVER pay a dividend — which you seem to prefer — is tantamount to converting Apple’s charter to nonprofit status.  Produce, sell, lock the profits away for a rainy day … Produce, sell, lock the profits away for a rainy day … Forever. Is that the plan?

        Really?

        It is incredible to me that someone would want to own a company that is never of any use to its owners — other than ‘pride of ownership.’  What other investment does one purchase with the express intention of deriving nothing from it?

        The company’s success was made possible with the dollars that I staked it when times were bad and it was barely keeping its head above water.  It was never my intention for that to be a one-way transfer, or that I would have to sell my holdings in the company to benefit from its success.  I knew that it would be necessary to forego a dividend while the company developed and executed its business model, but that was a temporary necessity rather than a permanent policy.

        If the alternative is locking dollars away in a Swiss bank account and then throwing away the key, I would far prefer that Apple lower the prices of iPhone and iPad by 35% to kill off Samsung, just to watch it die …

  2. Seriously? After surveying analysts, who can’t accurately gauge Apple’s business after checking with suppliers and retailers, we’re supposed to believe them when they weren’t able to check with anybody at Apple HQ? Seems like so much “get the story out there to put pressure on the company.”

  3. 50% Wrong. Stocks Buy Back is the way to go. $16B annually
    for stocks buy back and would effectively lessen Wall Street SHORTS in the long run, one way to screw hedge funds and Wall Street crooks.

  4. Whether its a buyback or a dividend they have to do something. Each has its own benefits. The dividend will attract investors who need income from their portfolio. A large buyback is also a great idea. If Wall Street is going to undervalue your stock then a great answer is “you don’t like it we’ll buy it”.

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