“It’s been more than ten months since Apple (AAPL) announced a huge expansion to its capital return plan. Apple hiked the plan to $100 billion, and most of the raise was going to be through share repurchases. Included in the announcement was a 15% hike to the dividend,” Bill Maurer writes for Seeking Alpha. “With nearly a year gone since Apple planted its foot as a capital return powerhouse, it’s now time to look forward to 2014.”
“The three main large cap technology names that rival Apple in terms of dividends are Microsoft (MSFT), Cisco Systems (CSCO), and Intel (INTC). At the moment, these three names all have higher dividend yields than Apple… But remember, Microsoft and Intel have been paying dividends for several years, and Cisco started its dividend about a year and half before Apple restarted its dividend,” Maurer writes. “Apple is behind, but remember, just a few years ago, Apple (and Cisco if you go back even further) had no dividend.”
“As of Monday’s close, Apple’s annual yield trailed Microsoft’s by 65 basis points, Intel’s by 136 basis points, and Cisco’s by 121 basis points. A dividend of $3.50 per quarter at current prices would eliminate more than half of Microsoft’s lead, one quarter of Intel’s lead, and almost 30% of Cisco’s lead,” Maurer writes. “The other way that this makes Apple better is because you are getting shares at a decent valuation currently… Apple is trading at a sizable discount to both Intel and Microsoft, and a comparable valuation to Cisco when Cisco’s earnings are converted to GAAP. An extra 34 basis points in annual yield would make Apple look like an even better investment, especially given the current growth forecast. Apple also has the most powerful buyback of these names at the moment.”
Much more in the full article here.