“As predicted, Apple faces a repatriation tax hit that approaches $40 billion. The company announced last week that the tech giant anticipates a $38-billion repatriation payment,” Stone Fox Capital writes for Seeking Alpha. “According to the Tax Cuts and Jobs Act, Apple has to pay a 15.5% repatriation tax on foreign earnings held in liquid assets like cash. Non-liquid assets are charged at an 8.0% rate with tax credits offered via some of the foreign tax paid on these earnings.”
“The bottom line is that the company now has the ability to utilize the $269 billion cash hoard as deemed appropriate,” Stone Fox Capital writes. “The company has up to 8 years to repay the $38 billion.”
“Consistent growth is the key to dividend investment and the prime reason that investors should hope for a normal dividend hike versus speculation that Apple will offer a special dividend suggested by Loop Ventures analyst Gene Munster of a $12 billion one-time payout,” Stone Fox Capital writes. “Since the reinstatement of the dividend in 2012, the company regularly hikes the dividend for the May payment with an announcement along with the FQ2 report.”
The quarterly dividend hikes are as follows:
• May 2013 – $0.436, up 7.8%
• May 2014 – $0.47, up 7.8%
• May 2015 – $0.52, up 10.6%
• May 2016 – $0.57, up 9.6%
• May 2017 – $0.63, up 10.5%
• May 2018 – $0.70E, up 11.1%
“The reason investors don’t want a much larger dividend or a special dividend is that Apple would signal that the stock doesn’t offer value anymore,” Stone Fox Capital writes. “The company has preferred stock buybacks since starting the capital return program over the last five years. The stock has far outperformed the market since the start of 2012.”
Read more in the full article here.
MacDailyNews Take: So, we’re looking at $0.70 per share quarterly dividend. Is $0.75 too much to hope for? Probably, as that would be a 19% increase YOY.