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With Apple’s shareholder meeting set to begin momentarily, the big question on many investors’ minds is whether Apple will finally announce a dividend.
Don’t count on it. At least not yet.
Apple’s robust growth has prompted its cash and investments to surge close to $100 billion, prompting many Apple watchers to say shareholders should be awarded with either a dividend or share buyback.
Last week at a technology conference, CEO Tim Cook reiterated the company’s stance that the cash hoard isn’t “burning a hole” in Apple’s pockets. But he did acknowledge that Apple’s management has had discussions with the board over how to proceed with its billions of dollars of cash in the future.
“I don’t think a dividend is coming today,” David Rolfe, chief investment officer at Wedgewood Partners and an Apple shareholder, said in a quick chat with MarketBeat. “Tim Cook played his hand a little bit last week by calling for patience. But I can’t imagine we’re not going to see something by year end.”
Apple shares were essentially flat at $513. The stock hit an all-time intraday high of $526.29 on Feb. 15 before retreating a bit. Shares are up about 27% in 2012.
Mr. Rolfe said he would prefer a dividend as opposed to a share buyback. “A stock buyback would be a neat headline and could pop the stock, but they’re easy to announce and tough to execute,” he says. “There are a litany of companies who have squandered shareholder capital through buybacks.
“If and when they announce a dividend, they should make it meaningful,” Mr. Rolfe adds. “Otherwise, don’t waste everyone’s time.”
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all i’m interested in is what tim cook wore to address the shareholders… the guy needs a stylist. http://littlebiggy.org/4648387
No reason for them to offer a dividend. It might actually lower the value of their stock, especially if dividend tax rates go up above LTCG rates. The market is not punishing them for keeping all that cash; the expectation is they’ll use to create magic. They have the best image of any brand in the world right now, why should they do anything that might mess with it?
Hopefully Apple is too smart to buy back their shares when they are setting new highs every month. Buybacks reward ex-stock holders, dividends reward current holders. It would also open Apple to institutional buyers who are required to get income from their stocks. This isn’t a huge market but they are “buy and hold” investors who add stability to the price.
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MarketBeat looks under the hood of Wall Street each day, finding market-moving news, analyzing trends and highlighting noteworthy commentary from the best blogs and research. MarketBeat is updated frequently throughout the day, helping investors stay on top of what's happening in the markets. Lead writer Steven Russolillo spearheads the MarketBeat team, with contributions from other Journal reporters and editors. Have a comment? Write to marketbeat@wsj.com.
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