Will Apple Celebrate Dividend’s Anniversary With a Gift for Shareholders?
Tomorrow will be the first anniversary of the announcement of Apple’s quarterly dividend and accompanying share buyback plan. And today, on its eve, the company’s stock is rising on speculation that it plans to raise that dividend, perhaps significantly.
Apple’s shares rose nearly 2 percent in early trading Monday following reports that the cash-rich company could boost its dividend by more than 50 percent. Earlier in the day, Bloomberg published a six-analyst survey, the consensus of which was that Apple’s quarterly dividend will rise 56 percent to $4.14 a share. That’s an annual payout of $15.7 billion.
Big bucks, indeed — the largest dividend yield ever, I think. But for a company like Apple, that’s sitting on $137 billion in cash and investments, it’s a realistic prediction. Apple has been under pressure to return some of that money to its shareholders, with some particularly vocal investors criticizing it for the “Depression-era mentality” with which it manages its cash hoard.
That doesn’t mean Apple will do anything with its quarterly dividend tomorrow, though it’s clearly in its best interests to do something to appease shareholders. If it doesn’t announce some sort of plan for its cash soon, there could be ugly repercussions.
“If an announcement does not occur [soon], investors will not only be disappointed in the lack of dividends but start to question whether the management team has the strength to make the smart/obvious moves into lower priced phones or new recurring revenue opportunities like payments and local commerce,” BTIG analyst Walter Piecyk explained. “Is that unfair? Sure. But after several missed quarters, investors patience has shortened with the absence of movement. The dividend decision is becoming an unfair and not entirely relevant proxy on whether the management can act.”