Apple Preparing to Offer 'Significant' Dividend for Investors Early Next Year?

[foobarbaz]

Forgive my ignorance, but if these investors are looking for money from a stock that hasn't offered a dividend in 17 years, can't they just sell?

Apple is worth 350 billion. 80 billion of that is cash.
That means Apple's value is "only" 270 billion.

So even if Apple doubles its worth to (2 * 270) + 80 = 620 billion, the stock grows only by 77% (because the cash is mostly just sitting there and definitely not growing as fast as Apple).

The point is this: the cash pretty much belongs to the shareholders. But they don't control it and much of it is just sitting there. A dividend means they can use that money to buy more Apple stock, meaning faster growth.

A stock buyback has the same effect, by the way.

 

[charlituna]

I think it's interesting how rather quickly Apple execs are flexing their power now that Jobs is gone.

You mean how fast the rumors have popped up that they are reversing all the things that Jobs was against. Next we'll see a return of the Blu-ray drives in Macs talk.

This guy has no clue. He thinks it would be nifty if Apple paid, so he's saying they are going to. But he really doesn't know and could easily be wrong

 

[jcb10]

But with Apple's cash and investments now topping $80 billion, calls for the company to return some of that money to shareholders have been on the rise.

I say use that cash to buy back stock and acquire a majority share of the company, if not outright take it private. Nothing like stockholders to stifle initiative.

 

[divinox]

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Forgive my ignorance, but if these investors are looking for money from a stock that hasn't offered a dividend in 17 years, can't they just sell?

"calls for the company to return some of that money to shareholders have been on the rise"

The money belongs to the shareholders, not the corporate entity. Apple has no use for 80bn, hence they should pay dividends.

No clue how 3% became significant though.

 

[fins831]

Just out of curiousity, how will the market react tomorrow with this news/rumors?

I currently own apple and have lost money recently...I am in it in the long term, but my brother (who gave me some extra cash) is worried that it is falling.

I've been trying to re-assure him that its a sound investment and will take a year+ to reach true potential, with a possibility of a nice payout in q1 2012...

just curious how this news should affect it...not going to day trade, prob would miss the gap up if there is/was one.

 

[bketchum]

No possibility some of those profits could be funnelled to the poorest of the poor, instead of making wealthy people wealthier?

Hear, hear!

 

[donnaw]

Just out of curiousity, how will the market react tomorrow with this news/rumors?

I currently own apple and have lost money recently...I am in it in the long term, but my brother (who gave me some extra cash) is worried that it is falling.

I've been trying to re-assure him that its a sound investment and will take a year+ to reach true potential, with a possibility of a nice payout in q1 2012...

just curious how this news should affect it...not going to day trade, prob would miss the gap up if there is/was one.

If anyone here could tell you that we would be either buying shares or puts.

Look, in all seriousness, AAPL is still a good investment. It's a strong company and makes good products. If they start giving a dividend then it's all good for you. If you're young, then reinvest those dividends in more stock. All this stuff about it stifling R&D is just 'stuff'. Apple has plenty of cash do to both. But as I said in an earlier post, if they don't do something with all that cash the stockholders are going to be taking their profits and exiting. That will cause a stock drop. The good news here right now is that hedge funds with APPL have already sold what they are going to sell for this year. They are already into redemptions.

 

[nutjob]

steve would never allow a dividend.

nev-er.

Apple will be the industry leader for quite some time but if this is true, the culture of Apple is changing. And in the long run, it would be strange if it didn't.

however there are...consequences.

Yes, the consequences are the stock will go up. Oh the horror.

Steve was an arrogant and inflexible guy. For some things that worked, for others it put Apple at a disadvantage. This is one of the latter.

 

[mrr]

So what about a stock split?

How does that figure into things?

 

[AidenShaw]

So what about a stock split?

How does that figure into things?

Not really relevant.

Apple having N million shares outstanding at $400/share is the same as having 2N million shares outstanding at $200/share.

 

[nylonsteel]

re original article

aapl - dont do a dividend

just do a 4 to 1 stock split

 

[paul4339]

So what about a stock split?

How does that figure into things?

Don't you mean a stock buy back?

A split theoretically does almost nothing except makes the stock more liquid. The only reason they would do a stock split is to make it more trade-able... but I'm not sure that's a problem Apple has.

A stock buy back or repurchase reduces the outstanding shares and increases the stock price. It's an alternative to dividends usually used if they want to off-load a lot of money (one time).

Dividends are generally (but not always) used if you can forecast continued and consistent profits usually from forecast-able consumption.... (such as from licensing fees, gas, food, toilet paper, lending etc)... sometimes they offer a one-time dividend as well.

BTW did anyone watch the Bloomberg video? The premise the this guy is making is that companies that have a harder time growing have to offer dividends to lure investors to buy their stocks. (does this apply to Apple?)
At the end, it goes on to show that Apple happens to be his largest holding. (you can draw you own conclusions)

.

 

[HiRez]

Must be nice to just pull things out of your ass and state them as fact for a living, Howard Ward.

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why would anyone invest in apple these days if they were not going to give out a dividend? their stock is not going to $600.

Right, just like:

"It's not going to $100!"

"It can't go to $200!"

"Now way can it go to $300!"

"It's ridiculous to think it could go to $400!"

Sell now!!!!

 

[Red Oak]

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A 3% dividend would cost Apple about $11 billion a year. Apple is generating over $40 billion a year in cash flow.

So, even with this large dividend, they will be adding substantially to their cash hoard at a rate of $30 billion a year

Put another way, Apple will approach $200 billion in cash in three years even with a 3% dividend

It's a cash generating machine. I don't see how paying it would affect their ability to aggressively invest in its businesses

 

[Shadylane315]

Hey guys,

Forgive me for my ignorance but does this mean the same as splitting the stocks 2 for 1 or 3 for 1? You lower the price of your shares but you walk away with 2 or 3 shares for every one you owned?

 

[DaveN]

3% of what

3% of the current stock price of $382.21? Let me see...

$382.21 x 0.03 = $11.46

What an ironic choice. I paid about $22 a share in 2002 before the split so it is like I'm getting all my money back plus getting to keep a $382 stock.

 

[MacSince1990]

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Forgive my ignorance, but if these investors are looking for money from a stock that hasn't offered a dividend in 17 years, can't they just sell?

"calls for the company to return some of that money to shareholders have been on the rise"

I feel that our users should be required to pass an IQ test before posting.

Just because Apple doesn't offer a dividend doesn't mean we want to sell. It's still an incredibly solid company with very high stability and reliability, which is not something you can say for most in this economy. Please think up something other than the horrid "if you don't like living here leave" cliche.

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why would anyone invest in apple these days if they were not going to give out a dividend? their stock is not going to $600. the largest market cap company should share the wealth with the shareholders. i'm interested in the percentage not the amount. viva los apples.

Actually it will go to $600. Maybe not by 2013, but that's fine. People don't invest in stocks because they expect them to nearly double... most investors are expecting 10-20% returns, maybe 35% medium-run returns. At least the ones with brains.

Apple could easily hit $1000 within 5 years.

 

[HiRez]

Hey guys,

Forgive me for my ignorance but does this mean the same as splitting the stocks 2 for 1 or 3 for 1? You lower the price of your shares but you walk away with 2 or 3 shares for every one you owned?

No, that's a stock split, a dividend is just some percentage of the stock price paid back to investors as cash. Usually it's a fairly small %. If they give a 3% dividend and you have $10,000 of Apple stock, you'd get $300 in cash.

In a stock split, there is no cash generated, you simply get more shares (if you have 500 shares worth $300 each, and there's a 3:1 split, you just end up with 1,500 shares worth $100 each). There's no difference in the value between the two. Usually they split stocks to keep prices attractive for smaller investors.

 

[vitzr]

For those naysayers that want to learn & grow.

Invest in yourself & get educated about the stock market.

It will give you an entirely new perspective on things.

Living in the USA, it's essential for those who care about our country & the world.

 

[elger]

The bulk of The cash is overseas bringing it 'home' would mean taxation....
If The lobby for The taxbreak is at The final stages...

My two lines

 

[EricBrian]

It is about time.

 

[lcm123]

Apple run their company very efficient and they spend minimum on acquisitions, so I don't think they intend to keep too much cash. I think we should give Tim Cook more credit. If he and the board decide to pay dividend, I'm sure it is something Steve would have approved and planned to do eventually. Steve said himself that money is not the most important thing. If they don't want to do a dividend, they could split the stock, which would cost nothing and would make it perceptionally attractive.

 

[dethmaShine]

That sound you just heard was LTD's heart hitting the floor

So much hate with you against that guy for having his opinions, that may sometimes be hypocritical and wrong. But who doesn't?

All your recent comments inflict a lot of hate against the guy. He may be a big fan sometimes, but you just sound sad, really. It's great that you're not really banned for this continuous assault.

 

[RalfTheDog]

So what about a stock split?

How does that figure into things?

A stock split would be great. Most if not all inverters like to buy and sell in units of 100. When a stock is approaching $400 that puts many people out of the market. A stock price of $100 is much more approachable. $50 would be nice.

One advantage of paying a dividend is it destroys people who short the stock. If you short sell a stock and it pays a dividend, YOU are responsible for paying that dividend to the loaner of the stock. Think of it as anti short insurance.

Note: Just because a company pays a dividend, that does not force you to take cash. Dividend reinvestment programs are nice.

 

[angrynstupid]

buy back

A stock buy back would be best. It would drive up the share price plus holders wouldn't have to pay taxes on the dividends.