2%-3% dividend suggested as best use of Apple's $100B in cash - Page 4

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.

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!

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.

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.

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.

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.

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?

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.

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.

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.

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.

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%.

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.

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.

They seem to be doing just fine with currently skyrocket prices compared to the competition.

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.

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.

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.

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.

Each time I read something you wrote I am more stunned than before. By what bizarre stretch of the imagination does Apple paying a dividend that has no appreciable effect on its cash pile and no discernible effect on Apple's future product plans transform it from a "growth" stock to a "dividend" stock? Am I supposed to pretend to believe that this makes any sense at all? It is obvious to me and probably everyone else here that this makes no sense at all.

If you invested in Apple to get dividends then you are a fool. If you invested to make money on the growth of Apple's stock, you have and still are. I trust Apple's board to do with the money what they feel is in the best interest for the continued long-term growth of the company.

Thanks for injecting some sanity into this discussion, debunking particularly the claims being made by the likes of Wovel.

You are almost certainly correct that the recent run-up in the share value is driven by the expectation that Apple will commence paying an annual dividend. Given this, it is beyond obvious that the value of the share increases substantially as a result of the dividend being paid, and does not reduce the value as certain misinformed people keep saying. Nor does a small dividend of this sort have any significant impact on Apple's future product plans or growth. The question of repatriation is one that I don't know about. The obvious questions are (1.) how much of the roughly 100 B is subject to repatriation costs, (2) what is the repatriation cost going to be if all of that amount is repatriated, and (3.) does the payout of a 3% dividend truly mean that some of that money not yet repatriated will have to be repatriated. These questions need to be addressed in meaningful detail before this repatriation business is a valid argument opposing the payment of the dividend.

But you have yet to suggest any alternative. Implicitly, you assert that Apple should just allow it to continue to accumulate. If you are proposing something else, then what, exactly?

Yep. The suggestion that someone made that by virtue of paying this trivial dividend transforms Apple from a "growth" stock to an "income" stock is just about as silly as it could be.

You agree that paying dividends is a waste of money? Then why is it that preferred stock, as opposed to common stock, is distinguished in part by the guaranteed payment of dividends? And if that makes sense, then why do banks like to buy stocks that pay dividends? Why are so many institutional investors upping the price of Apple stock on the prospects that Apple will commence paying annual dividends?

This is a preposterous argument. The amount of cash Apple is sitting on is 5x greater than the market capitalization of Sony, about 16x greater than the market cap of HP, nearly 3x greater than the market cap of MS. This is what all the analysts keep pointing out. If the amount of money we are talking about were 100 trillion, you would still be making the same statements. At what point do you decide that it would make sense for Apple to pay a 3% dividend? What is the alternative that you propose?

I own AAPL as a major part of one of my portfolios... I still have shares that I bought at $17 (before a 2::1 split). I have been buying additional shares over the years whenever it looked like it was a good buy.

I don't want a dividend or a stock buyback -- I bought AAPL for growth, not for income.

IMO, a better solution to increase the growth of the price of AAPL would to split the stock, say 10::1 to 50::1.

This would not directly change the valuation, but it would make the stock available to the small investor -- like I was when I bought those $17 shares.

IMO, in the long run, the stock would benefit by being held by a larger number of investors and be less influenced by the manipulators.

At the end of 2009 I gifted AAPL and some other stocks to my daughter -- she is quite happy with the results -- AAPL was at $210.

This year I plan to gift AAPL and other stocks to my 3 grandchildren.

They all have savings accounts at 2% interest (saving for cars).

But I want them to understand how to invest for growth and to Invest for income.

AAPL at $10-$50 a share would be easier for them to place into perspective than AAPL at $500.

No need to repatriate capital in order to pay a 2-3% yearly dividend.

Whoever claims that Apple would incur repatriation tax costs associated with a dividend is WRONG

Apple generates more then $9-$13bn(2-3% dividend) in retained earnings in the US over the course of a year. Apple does not need to touch their overseas money.

Link please -- not just talking a knee-jerk short-term blip, but continued long-term growth in the price of AAPL.

The opinions of investment analysts or brokers who just want to churn AAPL stock are suspect.

AAAARRRRRGGGGGHHHHHHH!

I hate to shout, BUT BY WHAT RATIONALE DO YOU REGARD STOCKHOLDERS AND ANALYSTS AS TWO MUTUALLY EXCLUSIVE CLASSES OF PEOPLE???????????????????????????

The analysts that I have in mind are the analysts that own shares and that are studying the situation from the standpoint of what is best for shareholders. This ought to be obvious. Yet you, just like that other person who keeps making silly, contrived statements, proceeded from the contrived precept that analysts and not stockholders. And then you proceeded to add a really, really intelligent and informed angle to the whole debate by asserting that stock holders do not control the company directly, but do so only by electing board members to represent them. On this as well you are just plain wrong. Stockholders get initiatives placed on the ballots quite often. It happens with Apple. It varies from company to company. What you stated as a universal truth is nothing of the sort. I haven't checked into it, but unless it is expressly prohibited in the corporate bylaws, it would be possible for shareholders to force the payment of a dividend whether the board wants it or not. The statement you made is in effect a claim that in no corporation is it possible for shareholders to force a corporation to do anything that the board does not favor, but if you have ever received a ballot prior to an annual shareholder meeting, you would surely know that this is simply not correct.

Dick Applebaum, you sound like a nice fellow.

Apple is way too large to be manipulated by hedge funds.

The reason a dividend makes sense is their are many large Value Fund Managers like Fidelity, Vanguard, T Rowe Price, etc that would LOVE to buy APPLE stock, but they are not allowed to since it does not pay a dividend. Also many retirees that live on a fixed income would welcome the chance to own Apple and receive a quarterly dividend.

Apple's growth is intact and would not be affected by a dividend.

I'm agnostic about a stock split, maybe you could explain to your grandchildren that a share of APPLE is VERY valuable and thats why it trades at $490(I'm not sure they would understand the concept of # of shares issued)

So you are claiming that to pay a 3% dividend, Apple would have to "repatriate" cash that otherwise they would not have to repatriate. Can you back this claim up with actual numbers? Given the rate that the cash pile is increasing, it just does not seem likely to me unless virtually all of the profit is being reaped overseas.

Slappy, is that you again? I love you, you little guy. So funny

Yeah... Analysts like Cramer who periodically buy/sell shares to manipulate them -- then brag about the churn.

Those aren't investors -- they're manipulators.

jragost gives way too much credit to the Board. Most Boards are puppets for Senior Mgmt that meet a few times a year. I'm sure when Jobs was Chairmen he ran the Board with an iron fist. 99.9999% of Apple's success was/is driven by their Sr Mgmt, engineers and all of their employees', certainly not the Board.

I am a nice fellow!

I did not suggest who is doing the manipulation -- just that manipulation is being done!

I believe that concentrating the AAPL holdings in a few large funds, as you suggest, is antithetical to long-term growth -- which is why I invested in the stock.

I would rather see Apple invest their cash in things that will maintain and improve long-term growth.

The split would dampen the effect of the manipulators and bring in the new generation of long-term investors.

No one should seriously listen to Jim Cramer for investment advice.

He is an entertainer out for ratings and book sales.

I agree 100%. At some point, whether it's 100B or 500B or 1T, Apple will have to have a good explanation as to why it's withholding that cash from shareholders.

It's true that SJ didn't consider dividends. But there is a point where they cannot justify the size of the hoard. I'm guessing, along with other stockholders, that the day of the iDividend is rapidly approaching. And I agree that that is pushing up the stock price, along with the impending arrival of the iPad 3.

Apple has plenty of cash to pay the dividend without depleting their powerful cash hoard.

There's money and there's money. The money AAPL earned within US have a lot of potential use, so that worth a lot more than the money earned in e.g. Japan. That's why they're not gonna use the money earned in US to pay dividend or do buybacks. I mean, they want to be able to, at any time, e.g. to engage in bidding war against some hot tech companies, and judging from how much GOOG paid Motorola, they could need 10s of $B in US as reserve for that. The overseas money, they'd have to pay tax to bring it back, which they'd never do unless there's a tax holiday (the hit in earnings would be so big it's not happening).