Your Move Apple (AAPL): Analysts, Investors Clamoring for Larger Payout
According to reports out Monday, Apple is expected to boost its quarterly payout by about 56 percent to $4.14 per share, from $2.65 the company currently pays. Total cost on the new plan will be about $15.7 billion. Yield on the annualized dividend would be about 3.7 percent, putting Apple in the upper echelon among dividend companies in the S&P 500.
Piper Jaffrays' Gene Munster notes that the dividend would be able to be paid from current cash flow without the company needing to tap overseas cash.
An analyst from Barclays agrees, saying Apple would be able to comfortably boost its payout to $3 per share, a 13 percent increase over the current rate, while being able to borrow against its overseas cash for larger returns. The Barclays analyst also thinks Apple might be able to triple its buyback program to $30 billion over the next three years
Apple is expected to add about $40 billion to $42 billion to its cash this year, according to estimates from Oracle Research. The firm sees Apple being able to pay a one-time dividend of $18 billion as well as boost its quarterly dividend to $3.31 per share.
Wall Street predictions called for a new dividend range of $3.31 to $5.30 per share.
Investors are expecting something soon; Apple CEO Tim Cook broke a 17-year streak with a surprise dividend announcement last March 19th. Following a recent slump that erased about $300 billion in market cap, Apple is now trading for a lower price-to-earnings versus rival Microsoft, the first time since early 2002. Market data has Apple going for about 10 times expected earnings while Microsoft (Nasdaq: MSFT) is at 11 times.
While some question why Apple has waited to long to make a decision, an announcement might be made as early as April, around the time Apple is slated to release second-quarter 2013 results. Though that still might be a little soon, the market is generally pricing in an announcement before the end of 2013.
Apple is indicated for a lower open Monday as U.S. index futures remain pressured.