BMO Capital Sees Opportunity for Bigger Apple (AAPL) Dividend and Buybacks

BMO Capital's Apple (NASDAQ: AAPL) analyst Keith Bachman weighed in on today's dividend and buyback announcement.

Bachman said the announcement was "long overdue, but a good first step in returning cash to shareholder." He sees plenty of opportunity for the company to grow both the dividend and buybacks.

For FY13, as an example, Bachman assumes total cash allocation of around $14 billion to shareholders, which compares to a free cash flow estimate of more than $50 billion. "In other words, we estimate Apple's cash balance at the end of FY13 will be greater than $160 billion, compared with around $98 billion at the end of the December 2011 quarter."

Commenting on US and global income fund buying potential, he said these funds have around $400 billion under management. If these income-oriented funds bought 5% positions, this would equate to about $20 billion in new money, or about 4% of AAPL's current market cap, he notes.

Bachman is maintaining his Outperform rating and $590 price target.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $585.57 yesterday.

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