2%-3% dividend suggested as best use of Apple's $100B in cash - Page 6

I wonder how much of it is in AUD ~ One of the best, if not, the best interest rates for savings in the G20 world.

Of course, if you're Apple, you'd be getting more than the retail ~5% cash interest rate.

Better yet, how about if you provide some evidence to back up your assertions or stop making stupid, unfounded assertions?

Disgraceful? A bit passionate, are we?

And you two continue to have so much time for each other

And you continue to have so much time that you keep commenting on a discussion that you're not even part of. Seems pretty hypocritical to me.

Not sure I'd agree to having committed hypocrisy. You'd be right if I am chastising you for wasting time. But I'm not. Just observing. Furthermore, I'm not taking nearly the time you two are, *debating* each other point by point.

But you're right. Time to return to doing real work.

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No time to hack through all 27 pages of comments
So please forgive any potential redundancy

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Before considering this dividend proposal
Answer simple question(s) ...

Of that $75 Billion (whatever)

Who would 'Spend It More Wisely' ?

Stock Holder/Broker/Institutional Types ?

Or Apple ?

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First, regarding all the back-and-forth on this thread: http://xkcd.com/386/

Second, does anyone know of a way to profit from Apple not announcing a dividend on this next earnings call? I already own AAPL. Besides shorting the stock, which I think is a dick move, is there a legitimate way of specifically betting against people who say Apple will offer a dividend?

Sure. Contact your local bookie to see if they have a line on the odds of Apple offering a dividend.

Other than that, in the stock market, you either bet on the stock going up or going down. There is no way to use the stock market to bet on one specific action.

Fundamentally, if Apple offers a dividend, the stock might go up or it might go down (in the short run, it would certainly drop by the amount of the dividend on the ex dividend date, so you have to keep that in mind). if Apple doesn't offer a dividend, the stock might go up and it might go down. You can't tie the two together, except in retrospect.


And, as has been pointed out relentlessly, Apple's board has decided that a dividend is NOT going to help share price - at least as of today. Warren Buffett does not believe that dividends help share prices for well-run companies.

The board knows more about their plans and needs than you do. I'll just rely on the board's decision as to if and when to offer a dividend. If you don't trust the board, perhaps you shouldn't own Apple stock.

The Warren Buffet comment is a bit disingenuous.

Berkshire Hathaway's 15 largest public stock holdings all pay dividends, that indicates to me that they like receiving dividends. Berkshire Hathaway, a financial holding company, doesn't pay out a dividends since Warren is the "World's Greatest Allocator" of capital.

Berkshire Hathaway has recently instituted a share buyback with their large cash position.

So Warren Buffett, the investor, likes dividends.

Yeah toning down now, after blowing my top on the China iPad thing.

First, your facts are wrong. Not all of his top 15 holders pay dividends. If you want to discuss things, please stick to facts, not your delusions:
http://www.forbes.com/sites/schifrin...end-obsession/
And it's not surprising that he wants SOME dividend-paying stocks in his portfolio. His salary is tiny. A smart investor will have a range of investments - both income generating and non-income generating. The fact that he considers SOME companies to be OK with dividends does not mean that he thinks it's a great idea. if you read his writings, it is clear that he thinks dividends are appropriate for an established company in a mature industry that has nothing better to do with its cash. That clearly does not apply to Apple.

Second, from the same article:
[/QUOTE]Most likely for tax reasons, Buffett is a stock buyback man. If you would like to read a great explanation of why you should consider Berkshires share repurchases as a valuable tax-free dividend, please read my colleague Bill Baldwins article, Berkshires Clever Tax-Free Dividend.[/QUOTE]
So Buffett is agreeing with me. If you feel that you must give away cash, do it in the form of share buybacks rather than dividends.

Third, Berkshire Hathaway investing in dividend-paying stocks is different than an individual doing so. They can exclude 70% of the dividends from taxes:
http://finance.fortune.cnn.com/2011/...boa-dividends/

Fourth, Buffett has specifically stated that Berkshire Hathaway will not pay dividends when he is alive:
http://www.youtube.com/watch?v=aL766NK2ynw
Keep in mind that he has no control over what other companies do (including those he invests in), but he does control what BH does - and actions speak very loudly.

Bottom line is that if you're going to use an appeal to authority as your argument, you ought to understand what that authority's position is.

jragosta, You are the king of the "straw man" argument.

Tedious and pedantic, you'll even TWIST/SPIN Warren Buffett's investing style to suit your arguments.

http://www.cnbc.com/id/33608379/Berk...dings?slide=16

OK, 14 of 15 of his LARGEST holdings pay dividends.

The point is Warren Buffett, the investor, makes a point to invest in dividend paying stocks.

Investors benefit from dividend payments and stock buybacks. Why don't you understand this simple concept?

jragosta, any comments on this point from Ben Reitzes analysis:

The sixth and final potential catalyst laid out by Reitzes was a hypothetical "return cash to shareholders" policy, which he believes would be a strong use of the nearly $100 billion in cash and investments being held by Apple. He noted that with that much cash, Apple is "running out of realistic excuses for hoarding so much," and he believes that investors are already beginning to price into AAPL stock the expectation of a dividend as soon as the upcoming shareholders' meeting on Feb. 23.

"We continue to believe Apple has the ability to easily pay a dividend with a significant yield (2-3% range) along with the ability to grow it over time," he said. "Furthermore, we believe consistent buybacks would be a better option than an accelerated buyback or a special dividend.

"We believe that Apple has recently sounded much more open in its propensity to offer a dividend and its Board likely realizes its potential value. We believe a dividend could be instated by calendar year end."

Third, Berkshire Hathaway investing in dividend-paying stocks is different than an individual doing so. They can exclude 70% of the dividends from taxes:
http://finance.fortune.cnn.com/2011/...boa-dividends/


HA HA read the article CLOWN

Buffett discredited the statement "They can exclude 70% of the dividends from taxes."

Even your attachments disagree with you

If you STRONGLY think/feel AAPL may decline sharply after the annual meeting, you may want to look into buying short-dated PUT options on AAPL.

Talk to your Financial Advisor and see if its appropriate for you.

Who the heck is Ben Reitz and why should anyone care what he says? Last time I checked, shareholders put a Board in place to run Apple, not Ben Reitz.


Says who? You?

I provided an article from Fortune magazine that shows which of the stocks pay dividends. I'll rely on that rather than your opinion as to which stocks pay dividends. Funny that you have to rely on a picture show as evidence, though.

Regardless, you were wrong when you said that ALL of Buffett's top holdings paid dividends.


Not at all true. Buffett has made his view clear. He may invest in companies IN SPITE OF their paying dividends, but there's absolutely nothing suggesting that he invests in companies BECAUSE they pay dividends. His own statements suggest that he does not.

The only company that Buffett controls is Berkshire Hathaway. BH does not pay dividends. THAT is an indication of Buffett's view on dividends. Since he has no control over the rest of the planet, whether other companies pay dividends or not is irrelevant.


Because it's wrong.

For the past decade, Microsoft has paid dividends. Apple has not. (Neither one has done a major stock buyback, AFAIK). So if your statement were correct, Microsoft investors should have benefited more than Apple investors. The reality is quite different. Let's use the last 5 years:
February, 2007
Microsoft 29.5
Apple 90

February 2012
Microsoft 30.3
Apple 523

So which investors benefited the most?

Clearly, the value of a share price is NOT determined by dividends or buybacks. There is absolutely no evidence to support your statement - and plenty of counter evidence.

Once again, Apple's Board and management have been given the responsibility to set policies by the shareholders. They have done pretty well without your "expertise".

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.

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.


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.

Way to miss Anant's dripping sarcasm.

Its posts like yours that renew my faith in humanity, well done!

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.

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.

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