Every few months, as Apple Inc.’s cash hoard gets bigger and bigger, analysts and investors alike speculate about whether this will be the year that the company reinstates its dividend.
Unfortunately, most investors have been left disappointed since 1995, the last time the tech giant paid out a nice cash sum to its shareholders. But ISI analyst Brian Marshall feels this is the year the dividend finally comes back.
“They could do a dividend of, say, 250 basis point-yield and only pay out 20-25% of their free cash flow,” he added. “They’ve got tremendous flexibility here, obviously, and we think that would drive an incremental US$4-billion of buying power to the stock, which is essentially the equivalent of a Top 10 holder. We think a dividend would be a material catalyst for the stock.”
Mr. Marshall’s outlooks follows a similar statement from Ticonderoga Securities analyst Brian White on Tuesday. Mr. White recommend Apple as his number one stock pick for 2012 and highlighted the possibility of a dividend being presented to investors.
“We believe Apple’s portfolio in 2012 has the opportunity to create more excitement around the story with our expectation for the unveiling of iTV, a ‘iPad mini and a major upgrade with the iPhone 5, while we expect the company to finally come to grips with its surging cash balance and issue its first cash dividend,” Mr. White said.
Investors are naturally itching for an Apple dividend, given the company’s stellar earnings in the last few years and the fact that it is sitting on more than US$76-billion in cash and marketable securities. But as mentioned before, talk of an Apple dividend has been going on for some time, with nothing to show for it so far.
