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

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Comments

  • jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by syracuse View Post


    jragosta,



    So I can conclude that if Apple's Board institute's an annual dividend and stock buyback, you will be a seller of AAPL stock, since you believe so strongly that Apple will follow Microsofts path.



    "I know Apple Sir, and Apple is no Microsoft"



    I never said - or implied any such thing. You really need to work on your reading comprehension.



    My position is simply that Apple's Board and management are in far better position to make a decision about whether Apple should offer a dividend than whiners on AI.



    I also believe (and have demonstrated pretty conclusively) that your argument that a dividend automatically boosts stock prices is bogus.
  • logic2.6logic2.6 Posts: 21member
    Quote:
    Originally Posted by EdKent View Post


    Those young ones on here who think Apple will have less money to invest in new products if they issue a dividend have not taken into account the rise in share price it will cause which means even more money pouring into the company which will actually be more than the dividend they announce.



    This is so stunningly wrong, I have to break an almost year-long absence from posting to respond.

    Any rise in share price (not guaranteed), will NOT mean "more money pouring into the company."



    Unless a company is doing an IPO or secondary offering, rises in its stock price have ZERO effect on the company's finances. Its shareholders can benefit, but there is NO balance sheet effect on the company.



    To put in more precise terms, absent a related public offering, a rise in the stock can NEVER result in a change in net cash from financing activities because there is no financing activity!



    A dividend issuance will DEFINITELY affect the company's balance sheet, regardless of whether the stock price increases or decreases as a result of dividend policy.



    This is the reason why Steve Jobs was able to thumb his nose at share price performance as long as the company itself was profitable.



    Quote:
    Originally Posted by EdKent View Post


    If they don't announce a dividend they must at least do a stock split. Either announcement are what is being expected, with caution, and will be a boost to investors and for the company, not to even speak of the huge amount of free news publicity they would achieve heading into the iPad 3 launch.



    They don't have to do jack. Your "must" is simply you inhaling too much hopium. I agree that a stock split (which is balance sheet neutral, unlike a dividend issuance) is likely to increase money flow into the stock, which would indeed a boost to existing shareholders. It makes not one whit of difference to the company's balance sheet.



    You also seem to confuse publicity for financial decisions and their impact on retail investors with publicity for a new product release and its impact on consumer purchase decisions. Steve Jobs priorities and their results were very clear - focus on the consumer, and you'll delight investors. Do the reverse and...well, the investing universe is replete with examples that demonstrate what happens when you do that.
  • logic2.6logic2.6 Posts: 21member
    Quote:
    Originally Posted by stelligent View Post


    That actually is not how it really works. So we have two financial non-geniuses here.



    Way to miss Anant's dripping sarcasm.
  • repairzoomrepairzoom Posts: 72member
    Quote:
    Originally Posted by mcarling View Post


    Then we would have an even worse global overpopulation problem, faster deforestation, and an even worse environmental disaster. No thank you. People who cannot feed themselves should not be breeding.



    Its posts like yours that renew my faith in humanity, well done!
  • jeffdmjeffdm Posts: 12,933member
    Didn't someone here predict that AAPL would go down if they didn't announce a dividend at the shareholder meeting? Made a lot of noise about that prediction, and now silent. Hmmm.
  • jag_warriorjag_warrior Posts: 177member
    I have to admit, this is one of the more interesting threads on the entire site.



    Of course we now all know that AAPL will be paying a dividend beginning this year. And as an AAPL investor, I take it as a positive. What it means to some investors is that we will now be receiving an actual return on our investment, in the form of income, rather than just the paper profits that we have now. For those who are new to investing or who want to learn more about historical returns in the stock market, there's a fairly decent site called Simple Stock Investing. That, along with some time on the very valuable S&P site might provide some with better overall knowledge of the equity markets and the whats and whys of it all.



    One thing that seems to be missing from some of the arguments here is that stocks don't always go up. The market doesn't always go up. And particularly in those times, dividends soften the blow for stocks that you would prefer to hold longer term. And even in better times, dividends add to the total return of a stock. If you go to the site I linked, you'll see that dividends provided approximately 44% of the returns from the S&P 500 over the past 80 years. And THAT is why people have historically chosen to have at least a portion of their portfolios in dividend paying stock. Since Buffett's name came up, take note of the preferred shares he's bought in BofA, GE and several other companies. He doesn't always go for the dividend (income). Sometimes he goes for an appreciation strategy, by buying the entire or substantial portion of the company. It's just part of a total return strategy that he's employed for decades.



    Whether it's a house in Palos Verdes or a stock, you only find out what an asset is really worth the day that you sell it and the money is in your account. If we learned nothing else from the housing bubble, hopefully most of us now know that paper profits can't be used to buy dog food or baby diapers.



    It's not necessary that every stock you own pays dividends. But certainly, anyone who has a well balanced portfolio would have a mix of dividend paying stocks, in addition to other asset classes. What the dividend will mean for Apple is up for debate. Had their investments yielded higher returns, maybe I'd feel differently. But parking the cash and seeing it be eaten away by inflation doesn't help anyone. Regardless, according to Cook, Oppenheimer and the BoD, Apple is in no danger of running short of cash to effectively run the business. And if they ever get in that state, they'll suspend or discontinue the dividend. Remember, the dividend is declared each quarter. It's not a binding contract that's been signed with shareholders. But what this certainly means for Apple investors is a return on investment that may make it less necessary to sell in order to realize some gains.



    I like Apple products very much. Someone even called me a "fanboi" on another site. Uh, was that a compliment? But when it comes to stocks, the emotion goes out the window. I could still love their products. But I don't get married to any stock or company. If & when it comes time to sell AAPL, I'll pull the trigger on it just as I would any other stock I own. To me, the financial markets are exciting, if not fun (because, yes, I'm weird like that). But the second you get emotionally attached to any stock, just accept that your losing days are somewhere right around the corner.
  • dcsimagesdcsimages Posts: 55member
    The problem in all this arguing as I see it is that there's a difference between investors and traders and most of the people complaining about dividends seem to be traders.



    Traders want a certain level of volatility in order to make a profit.



    Investors want stability and steady growth.



    Dave Smith
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