Why Apple shareholders should hope for a ‘normal’ dividend hike

“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.

13 Comments

  1. Personally I don’t much mind whether the stock increases in value, or whether the dividend is increased instead. Either way, the money I invested works for me and while there are different tax rules for dividends or capital gains, so long as a lot of value continues to be added to my investment, I’ll be a happy bunny.

    I suspect that if Apple we’re to pay higher dividends, the stock price would become less volatile, less reliant on the whims of Wall Street and that analysts would have less influence over AAPL’s price.

  2. We registered to attend the shareholders meeting. Registration opened at 8:00AM. By 8:05AM it was full. The new theater seats 1,000. I’d guess that’s a bit more than used to attend at the old campus.

    1. Everything Amazon does is perfect and offers more value to the company. Everything Apple does is seen as imperfect and compresses the P/E. For the life of me, how Wall Street sees Apple’s $200B in repatriated cash as nothing, is well beyond my comprehension. The saying “A bird in hand is worth two in a bush” doesn’t fit Wall Street at all. All Wall Street ever values is a bush with dozens of birds in it.

      Apple is a company that doesn’t seem to suit any praiseworthy Wall Street metric. It’s really weird to me because I must be missing some basic understanding of how companies are being valued.

    2. imply Apple leans more to value and “leaves” the definition of a growth stock…as large divi’s are usually tied to “value,” not “growth” stocks? AAPL has been defying the confines of both realms for years, as it continues notable growth, breaking the law of large numbers.

  3. Is this story serious? What investor would not want dividends to go up higher. Apple will always have a very high value no matter how much they pay back to stockholders weather its Warren Buffett or “small” people who own only a few shares. I think the story/writer is totally wrong. If you do not want bigger dividends sell your stock and go somewhere else other people who own Apple one bigger dividends…many people stuck with Apple since they were very small and should get a pay back when there’s a big bonus like it’s coming back to the USA.

  4. Smart to just keep increasing
    the dividend gradually each year.
    Both a growth stock and dividend stock…hopefully slowly becoming less of a play up and down stock to reward the loyal long-timers.

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