Nothing there that constitutes definitive evidence that a dividend would increase AAPL's share price. It's mostly opinion with a couple of examples of companies that increased their dividends. No cause and effect.
Quote:
Originally Posted by syracuse
There have been studies that show dividends are beneficial to stock prices.
They focused on corporate earnings growth over ten-year periods between 1871 and 2001 and found that earnings grew the fastest following years in which companies? dividend-payout ratios were the highest.
They've confused cause and effect. Companies that are doing well pay more in dividends. And companies that are doing well tend to do well the next year, as well. Essentially, all their 'evidence' shows is that companies give more dividends during good economic times and tend not to give dividends when there are clouds on the horizon. There's nothing there that indicates that the dividends cause (or even contribute to) growth.
Quote:
Originally Posted by syracuse
MSFT and AAPL are not the same company.
MSFT has been doing stock buybacks along with dividends. You can't then argue that it was the dividend that flatlined MSFT and then ignore the stock repurchases.
First, someone asked for an example of a company that went from not giving dividends to giving dividends and I presented MS as an example.
Second, it doesn't matter. There are plenty of other examples. Simple Investing 101 tells you that reducing the number of shares in circulations will increase the average share price if everything else remains constant. There is absolutely no such relationship for issuing dividends.
Furthermore, you're completely misrepresenting my position - as you've done all through the entire dividends debate. I fully expect that at some point Apple will have to distribute cash to shareholders. I just can't see how they can effectively use the cash that they're generating.
HOWEVER, my argument is (and has always been) that it's up to the Board and Management to decide when that time is right. No one on this forum or any of the idiot analysts who keep chiming in on the subject is in a position to dictate when Apple should do so. You buy AAPL if you're confident in the management's ability to make decisions like that. If you're not confident in their ability to make that decision, don't buy the stock.
But at this point I feel Apple should start paying a dividend out of their enormous free cash flow. They are throwing off a billion per month now IIRC.
More than a billion a week, at least based on the Q1 2012 rate of accumulation. Last quarter they were net an eye-popping $16b. Probably this won't be repeated in Q2, but the rate is certainly accelerating so adding another $50b this year is very much in the realm of possibility. It's a gargantuan sum growing at a breakneck rate. So even an extremely generous 3% dividend would cost Apple less than a third of the additional cash they are likely to accumulate this year. Instead of $150b they'd have to get by on $135b.
Nothing there that constitutes definitive evidence that a dividend would increase AAPL's share price. It's mostly opinion with a couple of examples of companies that increased their dividends. No cause and effect.
Both the cause and the effect are right there. Nothing is ever definitive but the evidence is very strong.
Both the cause and the effect are right there. Nothing is ever definitive but the evidence is very strong.
Bull. There's no cause and effect there. There's simply correlation. Companies that earn more money are paying more dividends and vice versa. IOW "when times are good, dividend-paying companies pay more dividends".
The cash IS available, just not without a significant tax hit.
Agreed. Lets say Apple's cash hoard has $50B here in the USA and $50B overseas. Wouldn't Apple have to pay corporate taxes at 35% repatriating the overseas cash before they pay out a dividend?
I don't know. Could someone educate me on this topic?
More than a billion a week, at least based on the Q1 2012 rate of accumulation. Last quarter they were net an eye-popping $16b. Probably this won't be repeated in Q2, but the rate is certainly accelerating so adding another $50b this year is very much in the realm of possibility. It's a gargantuan sum growing at a breakneck rate. So even an extremely generous 3% dividend would cost Apple less than a third of the additional cash they are likely to accumulate this year. Instead of $150b they'd have to get by on $135b.
Exactly.
Its a ridiculous amount of profit that Apple is generating. They can build a server farm out of 2 weeks worth of Q4 profits.
Any business or company that Apple might want to acquire that would need 100 billion in order to be bought, Intel (135 bil market cap) or Comcast (65 bil market cap), probably would be blocked by regulators.
Bull. There's no cause and effect there. There's simply correlation. Companies that earn more money are paying more dividends and vice versa. IOW "when times are good, dividend-paying companies pay more dividends".
You really need to study some logic.
Oh? Maybe you need to read the article. As it says very clearly, many institutional investors can't buy AAPL now because they pay no dividend. This means that the institutional investment market for AAPL is pretty much tapped out currently, but will open up to new customers if/when the company declares a divided. Perhaps this logic is just too straight forward for you to understand.
Oh? Maybe you need to read the article. As it says very clearly, many institutional investors can't buy AAPL now because they pay no dividend. This means that the institutional investment market for AAPL is pretty much tapped out currently, but will open up to new customers if/when the company declares a divided. Perhaps this logic is just too straight forward for you to understand.
There's no point discussing it when you simply make things up.
For example, why don't you point to ANY institutional investors who can't buy a stock that doesn't pay dividends - much less 'many'?
Agreed. Lets say Apple's cash hoard has $50B here in the USA and $50B overseas. Wouldn't Apple have to pay corporate taxes at 35% repatriating the overseas cash before they pay out a dividend?
I don't know. Could someone educate me on this topic?
First of all, no corporation pays the full 35% rate. The effective rate is usually much lower due to all the dodges and loopholes built into the tax code. Second, the tax rate they pay for repatriation is less the foreign tax paid. So what they'd pay would depend on where the money was earned.
Quote:
Originally Posted by backtomac
Exactly.
Its a ridiculous amount of profit that Apple is generating. They can build a server farm out of 2 weeks worth of Q4 profits.
Any business or company that Apple might want to acquire that would need 100 billion in order to be bought, Intel (135 bil market cap) or Comcast (65 bil market cap), probably would be blocked by regulators.
Thank you for grasping the scale. Few do, for some unknown reason.
FWIW, acquisitions of public companies typically involve some sort of stock swap, so they are not usually totally cash-in-hand deals.
Agreed. Lets say Apple's cash hoard has $50B here in the USA and $50B overseas. Wouldn't Apple have to pay corporate taxes at 35% repatriating the overseas cash before they pay out a dividend?
I don't know. Could someone educate me on this topic?
Since they have already paid taxes on the earnings in the US, they could distribute those without taking a tax hit. If they transfer money from their overseas subsidiaries to the US parent, that is what would trigger additional tax (above and beyond what they already paid the overseas authorities).
Oh? Maybe you need to read the article. As it says very clearly, many institutional investors can't buy AAPL now because they pay no dividend. This means that the institutional investment market for AAPL is pretty much tapped out currently, but will open up to new customers if/when the company declares a divided. Perhaps this logic is just too straight forward for you to understand.
You are SPOT on. And so is the note from the analyst.
Their is a large investor base of Mutual Funds that would LOVE to own AAPL but CAN'T. If AAPL pays a dividend those Mutual Funds will buy AAPL.
Its so basic and straight forward, its almost laughable.
There's no point discussing it when you simply make things up.
For example, why don't you point to ANY institutional investors who can't buy a stock that doesn't pay dividends - much less 'many'?
You are joking, right?
You obviously haven't worked in finance/banking.
Mutual Fund managers have very stringent rules about stocks they can and can't invest in. Their are MANY Mutual Fund managers that can only invest in dividend paying stocks.
If you are not aware of this then you should be QUIET.
There's no point discussing it when you simply make things up.
For example, why don't you point to ANY institutional investors who can't buy a stock that doesn't pay dividends - much less 'many'?
Don't show off your ignorance. Dr Millnoss is correct, there are many investment funds that won't / can't buy non-dividend paying stock. The article indirectly mentions that with; ""In other words, Apple is substantially under-owned by major investment funds, particularly those focused on income, i.e., dividend," and I own shares in two such mutual funds.
I do not want or need dividends. It only subjects me to tax. I own APPL for my retirement, which is many years away. When I need to access the money, I can sell the stock and pay capital gains tax rates, so who needs a dividend? A stock buyback on the other hand, is fine. By reducing the number of outstanding shares while profit is still on a strong upward swing, it is the best way to maximize the value per share. Thankfully, Tim Cook and the board understand these things, as evidenced by Tim's remarks at the shareholder meeting.
The funniest thing is that Steve Jobs was living off of stock dividends before he died. Apple was only paying him $1 per year in salary.
Jobs was raking in about $70 million a year in Disney dividends as the largest individual shareholder. His holdings were transferred into a private trust, so it's likely that his family continues to rake in the dough.
I remember Steve talking about focus and how that meant saying NO to ideas. Some that are even good ideas but that by saying NO to some ideas that allowed their focus to be sharpest on the best ideas.
This is a ridiculous idea for a tech company like Apple. Its beyond their core competency and I would sell Apple stock immediately if they announced such a stupid plan. I think others would as well.
Then again others would probably buy them just because of that.
And didn't Steve go into movie buissnes, which was at that time about as far from manufacturing computer hardware as getting into banking today. If Steve would have been as close minded as you suggest, he wouldn't have established the No.1 tech company of the world.
But don't get me wrong. I am not obsessed by this idea of Apple going iBank. The idea however is quite entertaining to me. And as I said, after some consideration, not completely crazy.
Second, that would result in an immediate drop of around $50 per share in value (look up my post in the other thread where I provided evidence that this would happen based on other companies and mutual funds which have offered large dividends).
Third, there would be a large corporate income tax hit in bringing the money back to the U.S. That would probably cause the stock to drop by MORE than the value of the dividend.
Fourth, there would be a large tax hit to the dividend recipient since dividends are taxable income. The result is that I would receive less money than the drop in the value of the stock.
Fifth, the argument that a dividend would have a positive effect on the share price is nothing more than unfounded speculation. Compare Microsoft to Apple for the past 10 years. Microsoft offers a dividend, Apple does not. Or Dell. Or almost any other company. If an institutional investor is not happy with the returns that AAPL has generated over the past decade, a dividend won't change their mind.
Overall, it's a crazy idea. If they really want to use the money to shore up stock prices, a stock buyback makes infinitely more sense.
To reply:
1 - yes, typo, sorry. $50 per share.
2 - Yes, that's how math works. Your shares go down by roughly $50 per share, and you get $50 per share in hand. How else would anyone expect it to work?
3 - Yes, that is a shame. And I'm hoping that the USA will allow that to be cut significantly in a one-time holiday. But A tax hit on $50 per share is better than no tax hit and shareholders get no cash.
4 - Those of us who hold Apple in retirement funds don't care. The rest, do. But again, paying taxes on income is better than not paying taxes because you have no income.
5 - I didn't say it would have a positive effect on the share price. I get to spend the $50 per share as I see fit, which is better for me than having it sit in a bank account (or a brokerage account in CDs).
I agree that a buyback would be preferable as well, but that is not what this discussion is about.
This is just plain bizarre reasoning. Please think about what you are saying. If Apple ever had to fund operations out cash reserves, then this would mean the company is losing money. Would you seriously want to be an AAPL investor if they went from being one of the most profitable companies on the planet to losing money?
Yeah I love that argument. Could you imagine a scenario where Apple needs $50 billion more than it can get by selling products and services? Running $50 billion in the red? How many people here would still be investing in it at that point? And who is dumb enough to think that that market would be cool with that expenditure just because they have the cash to not go bankrupt? I love it, so stupid!
t as good as mine, but if you want to have it that way, look at Microsoft's growth rates before they started giving a dividend and after. They grew a rapid rates until they started the dividend and they've been flat (or down) since then.
So you're saying that the dividend caused the slow growth? Sure sounds like it!
Comments
Untrue.
http://seekingalpha.com/article/3583...money-knows-it
Nothing there that constitutes definitive evidence that a dividend would increase AAPL's share price. It's mostly opinion with a couple of examples of companies that increased their dividends. No cause and effect.
There have been studies that show dividends are beneficial to stock prices.
http://www.marketwatch.com/story/app...ion-2012-02-24
That's closer, but look at their 'evidence':
They focused on corporate earnings growth over ten-year periods between 1871 and 2001 and found that earnings grew the fastest following years in which companies? dividend-payout ratios were the highest.
They've confused cause and effect. Companies that are doing well pay more in dividends. And companies that are doing well tend to do well the next year, as well. Essentially, all their 'evidence' shows is that companies give more dividends during good economic times and tend not to give dividends when there are clouds on the horizon. There's nothing there that indicates that the dividends cause (or even contribute to) growth.
MSFT and AAPL are not the same company.
MSFT has been doing stock buybacks along with dividends. You can't then argue that it was the dividend that flatlined MSFT and then ignore the stock repurchases.
http://www.microsoft.com/presspass/p...2dividend.mspx
http://www.microsoft.com/presspass/inside_ms.mspx
First, someone asked for an example of a company that went from not giving dividends to giving dividends and I presented MS as an example.
Second, it doesn't matter. There are plenty of other examples. Simple Investing 101 tells you that reducing the number of shares in circulations will increase the average share price if everything else remains constant. There is absolutely no such relationship for issuing dividends.
Furthermore, you're completely misrepresenting my position - as you've done all through the entire dividends debate. I fully expect that at some point Apple will have to distribute cash to shareholders. I just can't see how they can effectively use the cash that they're generating.
HOWEVER, my argument is (and has always been) that it's up to the Board and Management to decide when that time is right. No one on this forum or any of the idiot analysts who keep chiming in on the subject is in a position to dictate when Apple should do so. You buy AAPL if you're confident in the management's ability to make decisions like that. If you're not confident in their ability to make that decision, don't buy the stock.
But at this point I feel Apple should start paying a dividend out of their enormous free cash flow. They are throwing off a billion per month now IIRC.
More than a billion a week, at least based on the Q1 2012 rate of accumulation. Last quarter they were net an eye-popping $16b. Probably this won't be repeated in Q2, but the rate is certainly accelerating so adding another $50b this year is very much in the realm of possibility. It's a gargantuan sum growing at a breakneck rate. So even an extremely generous 3% dividend would cost Apple less than a third of the additional cash they are likely to accumulate this year. Instead of $150b they'd have to get by on $135b.
Nothing there that constitutes definitive evidence that a dividend would increase AAPL's share price. It's mostly opinion with a couple of examples of companies that increased their dividends. No cause and effect.
Both the cause and the effect are right there. Nothing is ever definitive but the evidence is very strong.
Both the cause and the effect are right there. Nothing is ever definitive but the evidence is very strong.
Bull. There's no cause and effect there. There's simply correlation. Companies that earn more money are paying more dividends and vice versa. IOW "when times are good, dividend-paying companies pay more dividends".
You really need to study some logic.
The cash IS available, just not without a significant tax hit.
Agreed. Lets say Apple's cash hoard has $50B here in the USA and $50B overseas. Wouldn't Apple have to pay corporate taxes at 35% repatriating the overseas cash before they pay out a dividend?
I don't know. Could someone educate me on this topic?
More than a billion a week, at least based on the Q1 2012 rate of accumulation. Last quarter they were net an eye-popping $16b. Probably this won't be repeated in Q2, but the rate is certainly accelerating so adding another $50b this year is very much in the realm of possibility. It's a gargantuan sum growing at a breakneck rate. So even an extremely generous 3% dividend would cost Apple less than a third of the additional cash they are likely to accumulate this year. Instead of $150b they'd have to get by on $135b.
Exactly.
Its a ridiculous amount of profit that Apple is generating. They can build a server farm out of 2 weeks worth of Q4 profits.
Any business or company that Apple might want to acquire that would need 100 billion in order to be bought, Intel (135 bil market cap) or Comcast (65 bil market cap), probably would be blocked by regulators.
Bull. There's no cause and effect there. There's simply correlation. Companies that earn more money are paying more dividends and vice versa. IOW "when times are good, dividend-paying companies pay more dividends".
You really need to study some logic.
Oh? Maybe you need to read the article. As it says very clearly, many institutional investors can't buy AAPL now because they pay no dividend. This means that the institutional investment market for AAPL is pretty much tapped out currently, but will open up to new customers if/when the company declares a divided. Perhaps this logic is just too straight forward for you to understand.
Oh? Maybe you need to read the article. As it says very clearly, many institutional investors can't buy AAPL now because they pay no dividend. This means that the institutional investment market for AAPL is pretty much tapped out currently, but will open up to new customers if/when the company declares a divided. Perhaps this logic is just too straight forward for you to understand.
There's no point discussing it when you simply make things up.
For example, why don't you point to ANY institutional investors who can't buy a stock that doesn't pay dividends - much less 'many'?
Agreed. Lets say Apple's cash hoard has $50B here in the USA and $50B overseas. Wouldn't Apple have to pay corporate taxes at 35% repatriating the overseas cash before they pay out a dividend?
I don't know. Could someone educate me on this topic?
First of all, no corporation pays the full 35% rate. The effective rate is usually much lower due to all the dodges and loopholes built into the tax code. Second, the tax rate they pay for repatriation is less the foreign tax paid. So what they'd pay would depend on where the money was earned.
Exactly.
Its a ridiculous amount of profit that Apple is generating. They can build a server farm out of 2 weeks worth of Q4 profits.
Any business or company that Apple might want to acquire that would need 100 billion in order to be bought, Intel (135 bil market cap) or Comcast (65 bil market cap), probably would be blocked by regulators.
Thank you for grasping the scale. Few do, for some unknown reason.
FWIW, acquisitions of public companies typically involve some sort of stock swap, so they are not usually totally cash-in-hand deals.
There's no point discussing it when you simply make things up.
For example, why don't you point to ANY institutional investors who can't buy a stock that doesn't pay dividends - much less 'many'?
What you mean is, there's no point in discussing it when I cite sources and you totally ignore what they say.
Agreed. Lets say Apple's cash hoard has $50B here in the USA and $50B overseas. Wouldn't Apple have to pay corporate taxes at 35% repatriating the overseas cash before they pay out a dividend?
I don't know. Could someone educate me on this topic?
Since they have already paid taxes on the earnings in the US, they could distribute those without taking a tax hit. If they transfer money from their overseas subsidiaries to the US parent, that is what would trigger additional tax (above and beyond what they already paid the overseas authorities).
Oh? Maybe you need to read the article. As it says very clearly, many institutional investors can't buy AAPL now because they pay no dividend. This means that the institutional investment market for AAPL is pretty much tapped out currently, but will open up to new customers if/when the company declares a divided. Perhaps this logic is just too straight forward for you to understand.
You are SPOT on. And so is the note from the analyst.
Their is a large investor base of Mutual Funds that would LOVE to own AAPL but CAN'T. If AAPL pays a dividend those Mutual Funds will buy AAPL.
Its so basic and straight forward, its almost laughable.
There's no point discussing it when you simply make things up.
For example, why don't you point to ANY institutional investors who can't buy a stock that doesn't pay dividends - much less 'many'?
You are joking, right?
You obviously haven't worked in finance/banking.
Mutual Fund managers have very stringent rules about stocks they can and can't invest in. Their are MANY Mutual Fund managers that can only invest in dividend paying stocks.
If you are not aware of this then you should be QUIET.
There's no point discussing it when you simply make things up.
For example, why don't you point to ANY institutional investors who can't buy a stock that doesn't pay dividends - much less 'many'?
Don't show off your ignorance. Dr Millnoss is correct, there are many investment funds that won't / can't buy non-dividend paying stock. The article indirectly mentions that with; ""In other words, Apple is substantially under-owned by major investment funds, particularly those focused on income, i.e., dividend," and I own shares in two such mutual funds.
I do not want or need dividends. It only subjects me to tax. I own APPL for my retirement, which is many years away. When I need to access the money, I can sell the stock and pay capital gains tax rates, so who needs a dividend? A stock buyback on the other hand, is fine. By reducing the number of outstanding shares while profit is still on a strong upward swing, it is the best way to maximize the value per share. Thankfully, Tim Cook and the board understand these things, as evidenced by Tim's remarks at the shareholder meeting.
The funniest thing is that Steve Jobs was living off of stock dividends before he died. Apple was only paying him $1 per year in salary.
Jobs was raking in about $70 million a year in Disney dividends as the largest individual shareholder. His holdings were transferred into a private trust, so it's likely that his family continues to rake in the dough.
I remember Steve talking about focus and how that meant saying NO to ideas. Some that are even good ideas but that by saying NO to some ideas that allowed their focus to be sharpest on the best ideas.
This is a ridiculous idea for a tech company like Apple. Its beyond their core competency and I would sell Apple stock immediately if they announced such a stupid plan. I think others would as well.
Then again others would probably buy them just because of that.
And didn't Steve go into movie buissnes, which was at that time about as far from manufacturing computer hardware as getting into banking today. If Steve would have been as close minded as you suggest, he wouldn't have established the No.1 tech company of the world.
But don't get me wrong. I am not obsessed by this idea of Apple going iBank. The idea however is quite entertaining to me. And as I said, after some consideration, not completely crazy.
First, $50 B would be $50 per share.
Second, that would result in an immediate drop of around $50 per share in value (look up my post in the other thread where I provided evidence that this would happen based on other companies and mutual funds which have offered large dividends).
Third, there would be a large corporate income tax hit in bringing the money back to the U.S. That would probably cause the stock to drop by MORE than the value of the dividend.
Fourth, there would be a large tax hit to the dividend recipient since dividends are taxable income. The result is that I would receive less money than the drop in the value of the stock.
Fifth, the argument that a dividend would have a positive effect on the share price is nothing more than unfounded speculation. Compare Microsoft to Apple for the past 10 years. Microsoft offers a dividend, Apple does not. Or Dell. Or almost any other company. If an institutional investor is not happy with the returns that AAPL has generated over the past decade, a dividend won't change their mind.
Overall, it's a crazy idea. If they really want to use the money to shore up stock prices, a stock buyback makes infinitely more sense.
To reply:
1 - yes, typo, sorry. $50 per share.
2 - Yes, that's how math works. Your shares go down by roughly $50 per share, and you get $50 per share in hand. How else would anyone expect it to work?
3 - Yes, that is a shame. And I'm hoping that the USA will allow that to be cut significantly in a one-time holiday. But A tax hit on $50 per share is better than no tax hit and shareholders get no cash.
4 - Those of us who hold Apple in retirement funds don't care. The rest, do. But again, paying taxes on income is better than not paying taxes because you have no income.
5 - I didn't say it would have a positive effect on the share price. I get to spend the $50 per share as I see fit, which is better for me than having it sit in a bank account (or a brokerage account in CDs).
I agree that a buyback would be preferable as well, but that is not what this discussion is about.
This is just plain bizarre reasoning. Please think about what you are saying. If Apple ever had to fund operations out cash reserves, then this would mean the company is losing money. Would you seriously want to be an AAPL investor if they went from being one of the most profitable companies on the planet to losing money?
Yeah I love that argument. Could you imagine a scenario where Apple needs $50 billion more than it can get by selling products and services? Running $50 billion in the red? How many people here would still be investing in it at that point? And who is dumb enough to think that that market would be cool with that expenditure just because they have the cash to not go bankrupt? I love it, so stupid!
t as good as mine, but if you want to have it that way, look at Microsoft's growth rates before they started giving a dividend and after. They grew a rapid rates until they started the dividend and they've been flat (or down) since then.
So you're saying that the dividend caused the slow growth? Sure sounds like it!