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

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  • focherfocher Posts: 567member
    Quote:
    Originally Posted by dasanman69 View Post


    Yes I do and one thing I know is that many investors look negatively on companies that don't pay a dividend especially one that's sitting on a stockpile of cash.



    Who cares? Investors who bought AAPL versus any dividend paying stock have earned more money. By definition, that means AAPL was a better investment strategy.
  • anantksundaramanantksundaram Posts: 17,203member
    Quote:
    Originally Posted by syracuse View Post


    What is your presumption then?



    Using the cash for a takeover?



    Apple has been returning .25% on their cash, I'd rather have that paid out to investors(me), where I'd promptly re-invest it in AAPL shares.



    If you're so ticked off with returns from AAPL because of the paltry returns on cash, I dare you to sell the stock. You can do that, you know.
  • anantksundaramanantksundaram Posts: 17,203member
    Quote:
    Originally Posted by jragosta View Post


    They could accomplish the same thing with greater tax efficiency by simply buying back shares.



    If Apple buys back shares, it has no impact on your taxes. If they issue a dividend to you and you buy back shares, you have to pay income tax on the dividend, so you're worse off.



    In addition, they have to repatriate money to issue a dividend since the dividend would be paid in U.S. dollars - which means more money lost to taxes. If they buy back shares in a different country and pay with local currency, they would not have to repatriate the money.



    So, if Apple really doesn't have a use for the money, a stock buyback makes a lot more sense than a dividend. But that's begging the question. The Board obviously thinks that, at least as of today, they need the amount of cash that they have. And since shareholders voted to elect the board, they have the final say.



    That's exactly right.
  • drobforeverdrobforever Posts: 400member
    Apple cannot pay dividend or buyback, because they don't really have the cash. Most of the cash is trapped in foreign countries and if they bring it back they'd have to pay tax and that'd be a huge hit to earnings.



    That's why these analysts are clueless. Only if Mitt became president and sign a bill of tax holiday, then we'd see AAPL pay dividend or do buyback.
  • anantksundaramanantksundaram Posts: 17,203member
    Quote:
    Originally Posted by drobforever View Post


    Only if Mitt became president and sign a bill of tax holiday, then we'd see AAPL pay dividend or do buyback.



    It doesn't matter who's President. It'll probably happen anyway. Moreover, it's a decision for Congress to make, not the President.



    Both Republicans and Democrats supported the move the last time it happened.
  • syracusesyracuse Posts: 73member
    Quote:
    Originally Posted by drobforever View Post


    Apple cannot pay dividend or buyback, because they don't really have the cash. Most of the cash is trapped in foreign countries and if they bring it back they'd have to pay tax and that'd be a huge hit to earnings.



    That's why these analysts are clueless. Only if Mitt became president and sign a bill of tax holiday, then we'd see AAPL pay dividend or do buyback.



    Apple could use earnings generated in the US or issue debt in the US to pay for a dividend.
  • digitalclipsdigitalclips Posts: 15,577member
    Quote:
    Originally Posted by Dick Applebaum View Post


    Here's an interesting take:



    Following Up: When Will Apple's Share Price Reach $500



    That is an awesome take. Thanks.
  • digitalclipsdigitalclips Posts: 15,577member
    Quote:
    Originally Posted by dasanman69 View Post


    Yes I do and one thing I know is that many investors look negatively on companies that don't pay a dividend especially one that's sitting on a stockpile of cash.



    So all of us with AAPL are obviously not part of your 'many'. Lucky us I'd say
  • wigginwiggin Posts: 2,082member
    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 utterly destroy the supply chain economics. You might have missed it, but recently there was an article detailing why Steve Jobs told President Obama that those jobs weren't coming back to the US. And it had little to do with how much the workers got paid. You would have to recreate the entire supply chain, practically from raw-materials to final assembly, and then train a workforce, not just worker bees but also the industrial engineers, before you could even consider such a plan. In other words, it would require a nation-wide committment, not just the actions of one company.



    Quote:
    Originally Posted by dasanman69 View Post


    Its very simple, a stockholder owns part of Apple, say a friend of yours asks you to invest in their company and says "I will make shitloads of cash but you'll get none of it". I don't know about you but I'd turn them down. You think the stock is high now? It would be through the roof if they paid a dividend.



    Or you could simply sell a few of those shares and pay the lower long-term capitals gains tax instead of the higher dividend tax rates.



    Apple is in a unique position of not having to really care that much if their stock price goes "through the roof". Obviously yes, they care, and they have a responsibility to their shareholders. But with their huge cash reserves, they are mostly insulated, operationally, from fluctuations in the stock price. Many companies rely on borrowed money for running their businesses. As such, they are very senstive to their credit ratings, which can in turn be affected by the stock price of the company. This is one reason why Apple has come through the recession unscathed. They have no debt-dependance. If only more business (and individuals) operated that way.



    The problem is that when most folks talk about the "responsibilities" of the company towards the shareholders, it's almost always in the context of short-term profit for the shareholders. As if the shareholders were actually the customers of the company. Apple is not an investment company. They are a consumer electronics company. Luckily Apple knows that even if some of its shareholders don't. Its Board should do what's best for the company because in the long run, that will be what's also best for the shareholders. Don't like it? Fine, take your money and invest it elsewhere. Apple doesn't need to care. They've got 100B in cash and absolutely no operational dependance on their stock price.
  • Quote:
    Originally Posted by Charel View Post


    There is more to Apple Inc than the shareholders. Think of the customers and the staff who are dependent on the success of the company.





    Neither of them count.



    The corporation is there to return maximum value to the shareholders. The customers and staff are used to feed maximum value to the shareholders.
  • herbapouherbapou Posts: 2,175member
    Quote:
    Originally Posted by Prof. Peabody View Post


    In other words, let's pour 2 or 3 percent down the toilet.



    Dividends are so last century. Everyone knows they don't do anything but waste money. A lot of rich folks will get marginally richer and everyone gets a free vacation that year. Big deal.



    It won't help the company in any way. It won't help them make better products, or cheaper products or more products. Just the opposite in fact.



    Dividends are the reason there is a stock market... A stock price is base on the future promise of participating in the profit. When a stock rise on growth, its all base of a future participation of the profits at a later time.



    If the company never pays and dividend, the stock is not worth anything at all, its just a piece of paper. Shareholders are the owners of the company, and by being so they have the right to take a cut of the profit.
  • herbapouherbapou Posts: 2,175member
    Quote:
    Originally Posted by drobforever View Post


    Apple cannot pay dividend or buyback, because they don't really have the cash. Most of the cash is trapped in foreign countries and if they bring it back they'd have to pay tax and that'd be a huge hit to earnings.



    That's why these analysts are clueless. Only if Mitt became president and sign a bill of tax holiday, then we'd see AAPL pay dividend or do buyback.



    You're even more clueless by thinking they need the cash to pay dividends... They wont touch the cash pile, the only thing the dividend will do is reduce the amount of cash that keeps piling up. The benefit of the dividend is avoiding a total collapse of the stock price when AAPL stop growthing because it will allow revenu funds to buy it when hedge funds dump it.



    Has a stock holder I dont want the stock to tank with no buyers on the other side. They must do this.
  • drobforeverdrobforever Posts: 400member
    Quote:
    Originally Posted by anantksundaram View Post


    It doesn't matter who's President. It'll probably happen anyway. Moreover, it's a decision for Congress to make, not the President.



    Both Republicans and Democrats supported the move the last time it happened.



    It'd have alraedy happened if Obama wanted it to happen, he'd have attracted so much donation to his PAC if he told the CEOs he'd allow this tax holiday. The fact it hasn't happened yet told you it's not gonna happen under Obama. Mitt is different, he's 'one of them', he'd do the tax holiday during his 1st 100 days guaranteed.
  • drobforeverdrobforever Posts: 400member
    Quote:
    Originally Posted by herbapou View Post


    You're even more clueless by thinking they need the cash to pay dividends...



    Anyone can just say others are clueless without providing any reasoning.
  • Quote:
    Originally Posted by jragosta View Post


    Perhaps they're planning to buy Bora Bora so that they can run their corporate offices free from local regulations and in a sunny climate where they can get free solar energy.



    I like Solipsism's suggestion of buying the Cook Islands better. Shipping costs might be lower.



    Of course, one of the main considerations is getting a country that is as unencumbered by foreign treaties as possible.



    Likely Apple already has its eye on something none of us have ever heard of, with no current government. That would allow them maximum flexibility as to which treaties to honor.
  • focherfocher Posts: 567member
    Quote:
    Originally Posted by I am a Zither Zather Zuzz View Post


    Neither of them count.



    The corporation is there to return maximum value to the shareholders. The customers and staff are used to feed maximum value to the shareholders.



    Nope. That only became a popular meme in the last 30 years and many of us fundamentally reject it. Read this Forbes article to get a very different perspective.



    Now compare how most companies have performed that follow the "maximize shareholder" approach versus Apple's "build great products" approach. Notice the difference?
  • quinneyquinney Posts: 2,444member
    Quote:
    Originally Posted by syracuse View Post


    ...

    I'm hearing Investment Banks have been canvassing "Value Fund Mgrs." about their interest in owning AAPL stock if Apple issued a dividend and presenting those results to the Board.



    I suspect some Large Value Mgrs. think Apple will issue a dividend and have proceeded to buy up shares ahead of the announcement leading to the rather large upward movement of AAPL recently.

    ...



    I suspected that too. Now, if Apple does NOT announce a dividend at their shareholder meeting,

    we may see a quick retreat of AAPL to where it was a few weeks ago.





    Quote:
    Originally Posted by anantksundaram View Post


    It is based on earnings. Period. Anyone that says it's based on stock price is clueless. Period.



    I thought the original poster wanted to understand how dividends were EXPRESSED as percentages, rather than how a company decides how much to pay. While dividends are determined by corporate boards based on the companies' finances, they are referenced as a percentage of the stock price (e.g. AT&T is expected to pay $1.76 per share in dividends this year and at their current price of $29.79 per share, that is a 5.9% dividend). The 2-3% dividend Wu talks about in the article would amount to about $10-$15 per share, with AAPL at about $500.

    If I misinterpreted the original poster's question, nevermind.
  • digitalclipsdigitalclips Posts: 15,577member
    Quote:
    Originally Posted by drobforever View Post


    Anyone can just say others are clueless without providing any reasoning.



    OK. That's a totally clueless comment
  • focherfocher Posts: 567member
    Quote:
    Originally Posted by herbapou View Post


    Dividends are the reason there is a stock market... A stock price is base on the future promise of participating in the profit. When a stock rise on growth, its all base of a future participation of the profits at a later time.



    If the company never pays and dividend, the stock is not worth anything at all, its just a piece of paper. Shareholders are the owners of the company, and by being so they have the right to take a cut of the profit.



    There are plenty of historical examples of stock purchasers making huge profits without ever once receiving a dividend from the stock. Dividends are simply a mechanism for participating in the profits while retaining ownership of the stock.



    What people forget is that Apple only cares about long term stock owners. Steve Jobs reminded us of this view during the "Antennagate" press conference. He was asked how he felt about those who had lost money in Apple stock value during the situation. His answer was "we don't care, we care about those who are long on Apple". The way long term stock owners participate in the profit is to see the stock's value grow over time. It's entirely speculative about whether a dividend helps, hurts, or is neutral to growing the stock value. I'll go with Apple's management on this one to decide. They've shown how to maximize shareholder value much better than anyone else.
  • esummersesummers Posts: 871member
    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.



    Component suppliers set up shop pretty quickly around the automakers in detroit, but not nearly as fast as they do in China. When major product revisions happen as quickly as they do in the electronics industry, it is a big risk to make changes that may disrupt that. One delayed project can cost a significant amount of money. I think that is a bigger issue then labor costs as things become more automated and more reliant on machinists to set up the equipment. Steve Jobs did speak of moving production back in his biography if there were people with the available skills here. He mentioned needing at least 30,000 skilled machinists to start. We already don't have enough people in vocational fields. This is one of many key problems to bringing production to the US. People seem to think this is all unskilled labor. We don't have enough skilled machinists for the factories we already have here. If and when it does happen, it would be initiated by companies like Foxconn that can do it slowly without disrupting the supply chain. I understand that they are already experimenting with bringing some production to the US.



    I'm not sure if a couple hundred acres would do it. That is the size of a company that is near me with 15,000 employees. They would need much more then that. I doubt any former factory sites are large enough. Most former sites are also old and torn down to begin environmental cleanup.
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