2%-3% dividend suggested as best use of Apple's $100B in cash

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  • Reply 121 of 226
    dasanman69dasanman69 Posts: 13,002member
    Quote:
    Originally Posted by Sacto Joe View Post


    What have they got to lose? They've got money to burn! Besides, we don't need a piddly little dividend. Apple went up well over 40% in the last year. Who cares about another lousy 2%, which will be less than that after taxes.



    You're absolutely right, and my friend just made a great point. That 100 billion is not in circulation. An economy thrives when people spend, on the other hand overly saving will kill an economy. Just ask the Japanese.
  • Reply 122 of 226
    Shareholders are soooo welllllll overrrrr compensated by Apple's stock price exploding -adding over $100 Billion to apples market cap! The capital gains on the surge of stock price is worth many billions to investors and shareholders.



    Paying dividends right now is like giving $100 to a someone who just won a $100M lottery. Its dumb!
  • Reply 123 of 226
    Quote:
    Originally Posted by jragosta View Post


    The Board obviously doesn't think so.



    You know, the people were elected by shareholders to direct the company. The people who have access to all of Apple's plans. The people who have a legal fiduciary responsibility to plan for Apple's future.



    Why should anyone accept your view over theirs?



    I'm not asking anyone to.



    I asked YOU a simple question.



    YOU avoided it.



    YOU obviously like to hop on this site and pontificate.



    BTW the Board could completely agree with me and make an announcement after the Annual meeting that they want to issue a dividend.
  • Reply 124 of 226
    The $100 billion should be conservatively spent to expand and FURTHER grow apple's business, Which will FURTHER increase revenue/profit which will FURTHER increase the share price AND shareholder VALUE.



    Expansion and growth also means more jobs, more taxes,more investments, etc.



    Paying dividends WILL NOT increase revenue/profit/share holder value, it WILL NOT create Jobs, it will NOT DO ANYTHING.
  • Reply 125 of 226
    Quote:
    Originally Posted by McRCN View Post


    Nothing like Apple receiving unsolicited advice from someone on Wall Street. Of course they want access to Apple's cash. If you want a dividend stock by Intel, Microsoft or a utility company. Besides why should Apple pay Uncle Barrack 35% in taxes on the cash needed to pay the dividend that is actually held overseas. It would be just throwing good money away at this point.



    And Wall St. will dump Apple stock and go buy something else if they don't pay a dividend. And the stock price will crash, then all you bagholders will be stuck with paper equities that you can never convert to cash.



    Dividends are a good idea, trust me, if anyone here actually owns Apple stock, you want a dividend.
  • Reply 126 of 226
    Quote:
    Originally Posted by FriedLobster View Post


    The $100 billion should be conservatively spent to expand and FURTHER grow apple's business, Which will FURTHER increase revenue/profit which will FURTHER increase the share price AND shareholder VALUE.



    Expansion and growth also means more jobs, more taxes,more investments, etc.



    Paying dividends WILL NOT increase revenue/profit/share holder value, it WILL NOT create Jobs, it will NOT DO ANYTHING.



    It will return money to the economy, which, as it gets spent again, will in turn drive more consumption or investment, which helps out the economy.
  • Reply 127 of 226
    Quote:
    Originally Posted by McRCN View Post


    Nothing like Apple receiving unsolicited advice from someone on Wall Street. Of course they want access to Apple's cash. If you want a dividend stock by Intel, Microsoft or a utility company. Besides why should Apple pay Uncle Barrack 35% in taxes on the cash needed to pay the dividend that is actually held overseas. It would be just throwing good money away at this point.



    Why wouldn't they want Apple's money? They own equity in Apple. Wouldn't you want some of the profits from a company you own?
  • Reply 128 of 226
    Quote:
    Originally Posted by Mikeb85 View Post


    And Wall St. will dump Apple stock and go buy something else if they don't pay a dividend.



    Oh, you know this? Could you be a dear and tell the shareholders here when that'll be so they can sell their stock before it?



    Quote:

    And the stock price will crash, then all you bagholders will be stuck with paper equities that you can never convert to cash.



  • Reply 129 of 226
    Quote:
    Originally Posted by Tallest Skil View Post


    Oh, you know this? Could you be a dear and tell the shareholders here when that'll be so they can sell their stock before it?



    Sarcasm aside, today would have been a good day to sell. This week was a huge week for Apple, so traders will be taking some profit. Earnings are already out of the way, so odds are good the stock price will lower somewhat until either a dividend is announced, or the iPad 3 is revealed.



    But honestly, if the rumours are true, and all you guys are wrong (which you probably are), and Apple does pay a dividend, then this thing will shoot to 600 or 700+, easy. But it's not happening without a dividend.
  • Reply 130 of 226
    Quote:
    Originally Posted by Tallest Skil View Post


    Oh, you know this? Could you be a dear and tell the shareholders here when that'll be so they can sell their stock before it?



    Apple's annual shareholders meeting is on Feb 23rd.



    If the Board does not authorize a share buyback or dividend, I would expect the shares to be down afterwards.
  • Reply 131 of 226
    Quote:
    Originally Posted by dasanman69 View Post


    So you'd rather pay zero tax on zero income vs. capital gains on free money?



    By holding the stock while it increases in value is how a shareholder is being rewarded by Apple. If they want to take profits now - and pay taxes on it - a shareholder is free to sell their shares now.



    For a long-term investor, they can hold the stock and sell it at a future date. Now there is the risk that the stock price might drop, but the trade off is the investor can choose when to sell their stock and incur the tax hit. That might be when they retire, and have a lower income rate, so they would pay a lower tax on the profits from the stock sale.



    All this thread shows is that we better fix Social Security because most people are clueless about finances and business, and are horrible financial planners. All they can deal with is their "muntlies". Its OK to by a new Apple product, as long as they can pay their minimum monthly credit card bill.



    And there is no free money. As pointed out, the taxes to repatriate profits generated overseas to use to pay a dividend would by significant. 35%.



    As for what Apple should do with all their cash - I trust the Apple board and management to make the right decisions because they have the best view of Apple's future plans and seem to be pretty smart at running the company. If you don't trust them, sell your stock, take your profits now, pay the taxes, and re-invest your money in some company you trust more than Apple.



    One thing to remember is a large portion of Apple's business is in products that run through life-cycles that are lengthening. Take a look at the iPod. The market is fairly saturated, there is not a huge amount of more innovation that can be done, and people buy them less frequently. The iPad will see the same pattern. How often will most people buy a new MacBook? The average user will probably keep a Macbook 5 years or more before considering a replacement.



    This is one reason Apple is pushing its eco-system. A steady income from app and music sales help make up for lessening product demand. You may not buy a new iPod or iPhone every year but you may buy songs, apps, etc.
  • Reply 132 of 226
    Quote:
    Originally Posted by Mikeb85 View Post


    It will return money to the economy, which, as it gets spent again, will in turn drive more consumption or investment, which helps out the economy.



    Apple does not have $100B stuffed in some giant mattress or hidden in a giant shoebox doing nothing. Those funds are in "cash equivalent securities" - something that Apple can easily cash-in - bank notes, government bonds, etc. The issuers of those securities use the money they got from Apple to fund other investments, make loans, etc.



    That $100B is not sitting idle and unused. It is part of the economy.
  • Reply 133 of 226
    Quote:
    Originally Posted by msimpson View Post


    By holding the stock while it increases in value is how a shareholder is being rewarded by Apple. If they want to take profits now - and pay taxes on it - a shareholder is free to sell their shares now.



    For a long-term investor, they can hold the stock and sell it at a future date. Now there is the risk that the stock price might drop, but the trade off is the investor can choose when to sell their stock and incur the tax hit. That might be when they retire, and have a lower income rate, so they would pay a lower tax on the profits from the stock sale.



    All this thread shows is that we better fix Social Security because most people are clueless about finances and business, and are horrible financial planners. All they can deal with is their "muntlies". Its OK to by a new Apple product, as long as they can pay their minimum monthly credit card bill.



    And there is no free money. As pointed out, the taxes to repatriate profits generated overseas to use to pay a dividend would by significant. 35%.



    As for what Apple should do with all their cash - I trust the Apple board and management to make the right decisions because they have the best view of Apple's future plans and seem to be pretty smart at running the company. If you don't trust them, sell your stock, take your profits now, pay the taxes, and re-invest your money in some company you trust more than Apple.



    One thing to remember is a large portion of Apple's business is in products that run through life-cycles that are lengthening. Take a look at the iPod. The market is fairly saturated, there is not a huge amount of more innovation that can be done, and people buy them less frequently. The iPad will see the same pattern. How often will most people buy a new MacBook? The average user will probably keep a Macbook 5 years or more before considering a replacement.



    This is one reason Apple is pushing its eco-system. A steady income from app and music sales help make up for lessening product demand. You may not buy a new iPod or iPhone every year but you may buy songs, apps, etc.



    You do realize that Apple has generated a large % of their retained earnings in the US. They have already paid taxes on that and would not be subject to additional taxes in order to pay a dividend.



    As far as the share holders are concerned dividends are taxed at the same rate as "long term gains" 15%.
  • Reply 134 of 226
    realisticrealistic Posts: 1,154member
    Quote:
    Originally Posted by AppleZilla View Post


    I think the best use of this money would be to buy up several hundred acres of former factory sites in the United States, move All production here, and slap 'Made in USA' stickers on every product box.



    Detroit is calling.



    And then Apple can watch their sales and profits drop like a rock because the price of their products will skyrocket relative to the competition.



    Detroit may be calling but Apple is not going to be taking that call.
  • Reply 135 of 226
    Quote:
    Originally Posted by Pixelino View Post


    Most of the cash is in offshore accounts (around 60% if I remember). Wouldn't Apple need to repatriate those funds first and pay taxes on it? Sorry for my faulty memory, but I think that would mean around 35% would just be taken away from the get go.



    Seems like dividends are a bad financial strategy for both Apple customers and shareholders.



    Nope, no need to repatriate off shore capital



    Using your math Apple has $40bn in the US.(I believe it is a higher % but I digress)

    If Apple's Board declared a 2%-3% dividend that would equate to $9-13bn a year. Apple could EASILY finance that with retained earnings generated in the US.
  • Reply 136 of 226
    dasanman69dasanman69 Posts: 13,002member
    Quote:
    Originally Posted by Realistic View Post


    And then Apple can watch their sales and profits drop like a rock because the price of their products will skyrocket relative to the competition.



    Detroit may be calling but Apple is not going to be taking that call.



    They seem to be doing just fine with currently skyrocket prices compared to the competition.
  • Reply 137 of 226
    Quote:
    Originally Posted by Wovel View Post


    What on earth makes you think analysts reflect the views of the stockholders? Nothing could be further from the truth. The directors are selected by the stockholders and they in fact represent them. Most analysts are not even shareholders. I am.



    Why don't I want a dividend?
    1. Apple would have to repatriate the money, losing a large portion of it to the US Government

    2. I don't want to pay anymore income taxes. A 3% dividend would devalue the stock by an equal amount and then I will get the added pleasure of paying capital gains tax. Thanks. A dividend is a lose/lose for all of us.

    Why not invest in Cirrus Logic. Who cares about Cirrus Logic. Right now Apple can make investments in places where they have money. They can't just spend the 100 bllion wherever the mood strikes them. I have no idea if Cirrus Logic makes any sense as a purchase for Apple.



    The problem Apple has is that the money is coming in very fast. In any cases it is coming in places they can not spend it without moving it. If they move it they will incur a large tax liability. A large part of it is waiting on a Western government to decide they want that money spent in their country. The buyback idea has some merit, but it still has the repatriation problem.



    Your post is long, but it is clear you have not really considered any of the issues around this. You claim others do not understand for-profit corporations. It is clear you do not understand the economics of a global corporation.



    The analysts I was referring to are the people on the likes of CNBC, who typically are in fact holders of the stock, as am I. To my way of thinking, they are analysts. I can't think of any reason why they should not be regarded as analysts. You evidently have a different definition, but you haven't made it clear, and it is clear that it is contrived.



    As for your reasons #1 and #2, I do not know what you mean exactly by "repatriating" the money. I would be interested in that explanation, assuming that you can make sense of it and it does not turn out to be the same as #2, i.e., the need for stockholders to pay tax. And as for #2, if the stock increases in value and you eventually make your money by selling the stock at a profit, you will pay capital gains tax. Presently capital gains are taxed at a discount below even the discount that you get in effect when you have an investment in a tax-deferred savings account (which makes no sense), and although I haven't looked into it lately, my recollection is that per the present statutory requirement, this is scheduled to return over the next few years to the levels that applied to capital gains prior to whenever it was that it was decided that people who make their living from their investments should pay less tax than people who make their living in the more common manner. (I make mine almost entirely from investments, for the record.) Yet, you imply that if you get a dividend, you will pay capital gains tax on the dividend. I am pretty sure that this is not correct, and that as such, you do not know what you are talking about.



    You dismiss the suggestion that Apple should buy Cirrus Logic. I gave a perfectly good reason. Cirrus Logic makes a product that Apple uses lots of, and Cirrus Logic is profitable. It is a no-brainer. Yet, you dismiss it, and you don't even give a reason. If you are not even going to bother to give a reason for what you assert, why should anyone pay any attention to you? For that matter, why should you pay any attention to yourself, if you make assertions and then turn immediately around and admit that you don't have any reason for the assertion?



    You say that I have no considered the issues around this, but the only thing that you really brought up is the business of "repatriation". But you have not said anything about what this actually means, and you have not put any money behind it. Presumably you are saying that a substantial amount of this "cash" is not cash in the sense of USA currency, and you imply that Apple could not pay this meager 2% - 3% dividend without having to pay for this repatriation. This is something that you need to explain, in detail, with numbers, i.e., numbers that give quantitative meaning to just how much money would be paid to the federal government, by Apple, in order to pay holders of common stock a meager dividend.
  • Reply 138 of 226
    Quote:
    Originally Posted by Wovel View Post


    The dividend is worse than that. It would drop the present value, reduce future growth, and create a tax liability for investors. Additionally, repatriating the cash to pay the dividend would incur a significant tax liability for Apple.



    You keep making these claims, but you do not back any of it up. A 2%- 3% dividend from Apple is not going to have a negative impact on the value of the stock. In fact, it will have precisely the opposite effect. There is widespread agreement among informed shareholders that this would be the effect on share value, yet you assert the opposite. And how would it reduce future growth, given that Apple has not yet even figured out what else they would do with it? This obviously does not make a whit of sense. And again you talk about repatriating the dividend, yet you still have not explained just what this entails and have not said anything definitive about just how much money would necessarily be forfeited to pay a meager 2% - 3% dividend.
  • Reply 139 of 226
    Quote:
    Originally Posted by Wovel View Post


    You apparently have never owned a stock.



    It seems to me that you must be the one who has never owned a stock. There is practically unanimous agreement among informed shareholders, for reasons that are apparent to just about everyone but you, that as soon as Apple begins to pay a dividend, the value of the stock will increase dramatically. Perhaps you are thinking of the more mundane effect that occurs whenever a stock that routinely pays a dividend goes post-dividend. If that is what you are thinking of, then you are being disingenuous. It is not the same thing at all. That is what happens to a stock where the perceived value of the stock derives expressly from the regular payment of dividends, i.e., where the stock is more like a bond or a savings account for intents and purposes. This is presumably what you are thinking of, but it has no real applicability here. IF the dividend is announced for payment for stockholders of record at a future date, then of course there will be a short term ramp up in the value of a share leading up to that date, and then an abrupt drop when it goes post-dividend. But this effect is a wash. You have to pay for the dividend to get it. The more significant effect for Apple common shares will be the effect that occurs by virtue of the change in philosophy re paying dividend. The mere fact that Apple will at times pay dividends will increase the value of the stock. You seem not to understand this, and if you really do own in Apple stock, you are evidently the only owner of Apple stock who does not realize this.
  • Reply 140 of 226
    Quote:
    Originally Posted by kaiser_soze View Post


    You keep making these claims, but you do not back any of it up. A 2%- 3% dividend from Apple is not going to have a negative impact on the value of the stock. In fact, it will have precisely the opposite effect. There is widespread agreement among informed shareholders that this would be the effect on share value, yet you assert the opposite. And how would it reduce future growth, given that Apple has not yet even figured out what else they would do with it? This obviously does not make a whit of sense. And again you talk about repatriating the dividend, yet you still have not explained just what this entails and have not said anything definitive about just how much money would necessarily be forfeited to pay a meager 2% - 3% dividend.



    Kaiser you are correct,



    Wovel is woefully misinformed.



    Apple DOES NOT have to repatriate a penny OR pay any additional taxes to the US in order to pay a 2-3% dividend.
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