Sacconaghi: Apple won’t boost its dividend until after April 23

“According to Bernstein Research’s Toni Sacconaghi, Apple’s top brass has been holding ‘widespread discussions’ with key investors to get input on its plans to return more of its $137.1 billion cash hoard to shareholders,” Philip Elmer-DeWitt reports for Fortune.

“Sacconaghi has been debriefing those investors and now thinks he has a pretty good idea of how Apple’s cash management plans have evolved,” P.E.D. reports. “Although many investors were hoping for some kind of announcement in March, or are expecting it to be made next week during Apple’s Q2 earnings report, Sacconaghi believes the two events are too important to be conflated, and that Apple will put at least a couple weeks between the April 23 report and any announcement of new cash management plans.”

“He also believes investors are looking for Apple to return 50% of its free-cash flow to shareholders on an ongoing basis, or about $22 billion a year. (Apple’s current cash-return rate, between stock buybacks and dividends, is $13 billion),” P.E.D. reports. “If Apple were to return all of that 50% of free-cash flow in the form of a dividend, he estimates, the yield would be around 4.5%, one of the highest among large cap tech stocks.”

Read more in the full article here.

Related article:
Apple to webcast Q213 earnings release conference call on April 23rd – April 3, 2013

19 Comments

  1. A dividend increase announcement at earnings won’t help the stock. That’s like saying the sun will come up tomorrow morning. It’s a given. How could they not increase the dividend? No, it’s not going to help the stock price at all.

    1. As soon as they increase the dividend, the stock will drop by an equivalent amount because it is the total package of stock price and dividend that the market evaluates the company worth.

      1. you haven’t a clue what you’re talking about and it’s likely that most of you don’t even own a single share of AAPL stock. it’s the shareholders’ money that helps make Apple what it is, and we deserve to get a share of the profits. Apple should do both; continue to buyback shares to help lift the stock price AND they should pay reasonable dividends to the investors.

        1. Thank you for your kind words of explanation. You really set me straight now. I actually make my living off of trading options and only make about $250,000 a year. I currently only hold 560 shares of AAPL but recently had 3030 shares of AAPL. Your advice is exactly what I needed.

            1. I don’t quite know how to take your sad vision of the things I have said. Unfortunately, your opinion of me has no impact or value but your postings here seem to tell the world volumes about who and what you are. The choices you make in your life have lead you to your present state. Consider that you were created noble and that you do not need to debase yourself. Live a good life. Be happy.

  2. How do they return so much of their growing cash hoard to greedy investors in the U.S. when two thirds of it is overseas? Borrow it? That’s stupid. If Apple can’t repatriot the overseas cash without paying the 30% tax rate, they should eave it there for overseas investments.

    Apple should NOT borrow cash from the banks using its cash hoard as collateral just because Wall Street wants to raid its piggy bank.

  3. This dividend thing just drives me up the wall. It forces you to take some of the value of a company and pay taxes when you may have no current use for the money.

  4. Don”t hold your breath Tony, when you say ” Any cash return program that is smaller (than 50%), is likely to disappoint investors”,
    do you mean institutionals (like the greedy slimy hedge funds), or the die hards? It’s amazing how you would presume for both…

    Second, Apple’s in no rush to take on any debt.

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