Despite having $121B in cash, Apple not expected to issue special dividend

Posted:
in AAPL Investors edited January 2014
With Apple's cash hoard swelling to more than $120 billion dollars, some investors have begun to hope that the company could issue an additional special dividend to shareholders. However, one analyst says while that decision would be welcome, it's very unlikely to happen.

Chris Whitmore of Deutsche Bank issued a note to investors on Monday after he received a number of inquiries regarding the potential for Apple to pay out a special dividend. The company currently has $121 billion in cash, and it's expected to grow to $156 billion in fiscal year 2013, ballooning past $200 billion a year later.

"In our view, Apple has ample capacity to pay a large special dividend and still grow net cash per share while buying back stock," Whitmore admitted, but he still doesn't think it will happen

Special dividends can be a short-term boost for a stock, but they do not tend to have a lasting benefit to shareholders. Whitmore believes Apple is more focused on building a track record of predictable dividend growth.

Deutsche


Another problem is about $83 billion of Apple's cash balance is offshore. The $45 billion Apple plans to spend on recurring dividends and share buybacks will be entirely domestic cash.

The company announced in March its plans to spend $45 billion over three years on dividends to investors, along with a share repurchase program. The decision was a change of course for Apple, which had long refused to pay out a dividend to shareholders.

Apple's quarterly dividend amounts to $2.65 per share, and payouts of $2.5 billion were issued to investors in August and November. They were Apple's first dividend payouts in 17 years.

But Apple is also earning cash faster than it can pay out its $2.5 billion in dividends per quarter, which means its cash hoard continues to grow. As of the end of its fiscal 2012, Apple had $121.4 billion ? a number that's expected to grow even more during the company's lucrative holiday quarter.

Investors are clamoring for a special dividend from Apple because the tax rate on such payments may increase from 15 percent to about 40 percent in January if the President George W. Bush-era tax cuts are allowed to lapse by congress and President Obama's administration.

However, Whitmore did admit that Apple has become increasingly "shareholder friendly," thanks in large part to its decision to pay out dividends. He views the company as an attractive buy for prospective investors, with a "buy" rating and a price target of $800.
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Comments

  • Reply 1 of 53
    irelandireland Posts: 17,547member


    Don't give 'em jack shit, after what they did to the stock recently. Manipulators, the lot of 'em.

  • Reply 2 of 53
    paxmanpaxman Posts: 4,591member

    Quote:

    Originally Posted by AppleInsider View Post



    With Apple's cash hoard swelling to more than $120 billion dollars,


     


    You can never be too careful, right? $120 billion may sound a lot but who knows? One day you might just wake up and need $150 billion! Then what are you gonna do?

  • Reply 3 of 53


    Originally Posted by paxman View Post

    One day you might just wake up and need $150 billion! Then what are you gonna do?


     


    Wait a month.

  • Reply 4 of 53
    If you wake up suddenly needing $150B, you should be fired.
  • Reply 5 of 53


    No dividend, just $600 memory upgrades and we will make it really hard for you to do it yourself.   Whoooohoooo....

  • Reply 6 of 53
    allenbfallenbf Posts: 993member


    Pretty sizeable war chest, I'd say.  Apple should start shopping around for a company in the mobile payments arena.

  • Reply 7 of 53
    paxmanpaxman Posts: 4,591member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    Wait a month.



    Well, that is true. But what if you just can't wait? What if you just must have that cash right NOW? Then what?

  • Reply 8 of 53


    Originally Posted by Macboy Pro View Post

    No dividend, just $600 memory upgrades and we will make it really hard for you to do it yourself.   Whoooohoooo....


     


    We need to have melgross do a post on why on-board RAM is a better idea than carded RAM. That way we can reference it every time this comes up.





    Originally Posted by paxman View Post

    Well, that is true. But what if you just can't wait? What if you just must have that cash right NOW? Then what?


     


    I'll expound on what jbruni said and say that if you wake up suddenly needing even THIRTY billion, you should be fired.


     


    There's no situation in which Apple will suddenly be required to need more cash than it has. It just isn't happening.

  • Reply 9 of 53
    allenbfallenbf Posts: 993member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    We need to have melgross do a post on why on-board RAM is a better idea than carded RAM. That way we can reference it every time this comes up.


     


    I'll expound on what jbruni said and say that if you wake up suddenly needing even THIRTY billion, you should be fired.


     


    There's no situation in which Apple will suddenly be required to need more cash than it has. It just isn't happening.



     


    Tell that to Enron.

  • Reply 10 of 53
    quinneyquinney Posts: 2,523member
    I think they will increase the quarterly dividend next year, and the year after that, and the year after that, etc.
  • Reply 11 of 53
    quinneyquinney Posts: 2,523member
    allenbf wrote: »
    We need to have melgross do a post on why on-board RAM is a better idea than carded RAM. That way we can reference it every time this comes up.

    I'll expound on what jbruni said and say that if you wake up suddenly needing even THIRTY billion, you should be fired.

    There's no situation in which Apple will suddenly be required to need more cash than it has. It just isn't happening.

    Tell that to Enron.

    Other than both being publicly traded corporations, what do you think Enron and Apple have in common to make your reference relevant?
  • Reply 12 of 53
    solipsismxsolipsismx Posts: 19,566member
    macboy pro wrote: »
    No dividend, just $600 memory upgrades and we will make it really hard for you to do it yourself.   Whoooohoooo....

    Bullshit! There is no $600 memory upgrade that is really hard to do yourself.
  • Reply 13 of 53


    Originally Posted by quinney View Post

    Other than both being publicly traded corporations, what do you think Enron and Apple have in common to make your reference relevant?


     


    "Corruption, sleaziness, and a disregard for its patrons". image

  • Reply 14 of 53
    paxmanpaxman Posts: 4,591member

    Quote:

    Originally Posted by Tallest Skil View Post


    I'll expound on what jbruni said and say that if you wake up suddenly needing even THIRTY billion, you should be fired.


     


    There's no situation in which Apple will suddenly be required to need more cash than it has. It just isn't happening.



     


    OK, then, I give up. I guess I won't get my 150 billion when I wake up (if I want to keep my job), but 29? AND keep my job? Done deal!


     


    I kid, of course. To be quite honest, much as I love all things Apple I question the morality of sitting on such wealth. Perhaps an Apple tax should be levied against Apple. Perhaps Apple should be required to hand over an iPad mini to every financially struggling family in the US. Or perhaps they should have to pay an annual tax to subsidize college education for hard up kids. It wouldn't make Apple any less successful. Perhaps over time it would turn out to  be a great investment that could benefit even more people as well as Apple. 


     


    Just thinking aloud....

  • Reply 15 of 53
    Sooo... What Apple is NOT doing is now news?
  • Reply 16 of 53
    aaarrrggghaaarrrgggh Posts: 1,570member
    The idea that they would give a special, last-minute dividend to allow stockholders to save on taxes is asinine. Hopefully though they are taking advantage of the depressed share price with buybacks at least.

    With just $100B they could buy Visa...
  • Reply 17 of 53
    solipsismxsolipsismx Posts: 19,566member
    aaarrrgggh wrote: »
    The idea that they would give a special, last-minute dividend to allow stockholders to save on taxes is asinine. Hopefully though they are taking advantage of the depressed share price with buybacks at least.
    With just $100B they could buy Visa...

    They could make their Passbook really shine with Visa but I think a better move would just to partner with V, MC et al. (which they already do with iTS anyway).

    They could buy TMSC or just start their own. It would probably take them at least half a decade to get it up and running well but making their own chips would be a huge advantage.

    How about a company like LG, whom I think they already have been investing in to create their Retina displays which are built by other companies?
  • Reply 18 of 53
    dasanman69dasanman69 Posts: 12,974member
    paxman wrote: »
    You can never be too careful, right? $120 billion may sound a lot but who knows? One day you might just wake up and need $150 billion! Then what are you gonna do?

    Can you come up with a situation in which that could occur?
  • Reply 19 of 53
    herbapouherbapou Posts: 2,221member


    Cant find the IZGO apple TV news, where is it?  Just saying because I hope Apple will use this tech in the next iPads and iphone. 

  • Reply 20 of 53
    paul94544paul94544 Posts: 1,027member


    1) Buy Microsoft and put its consumer division to rest, integrate iOS in to Exchange/Sharepoint etc replace Windows with OSX


     


    or


     


    2) Buy Twitter and Facebook


     


    3) Merge with Google (kill Motorola)


     


    4) Buy Amazon and Yahoo


     


    5) Buy Samsung , kill Galaxy line


     


    5)  wait and see mode a few years until cash hoard is > stock valuation

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