*from www.bloomberg.com, Mar. 18, 2013 (To view original article click here.)
Take Away #1: Apple is poised to boost its dividend by more than half, providing investors one of the highest yields in the U.S. technology industry.
Key Facts and Figures:
- Apple likely to lift its quarterly dividend 56% to $4.14 a share, for an annual payout of $15.7 billion.
- The resulting yield of 3.6% would be higher than 84% of the companies in the S&P 500 Index paying dividends.
- Apple could fund a payout with existing cash flow without using profits from overseas which can be subject to extra taxes.
- Apple rose 2.7% to $455.72 in new York.
- The stock has declined 35% from a peak on Sept. 19, compared with a 6.2% gain for the S&P 500 Index.
Take Away #2: Apple CEO, Tim Cook faces mounting pressure to take bolder steps to pay out more of Apple’s $137 billion in cash and investments.
Key Facts and Figures:
- CEO Tim Cook, a year ago this month, reinstated a dividend and announced a $10 billion buyback.
- Investors including David Einhorn are pushing for more money as growth slows and competition from rivals like Samsung intensifies.
- “The accumulation of cash has become excessive,” says Brian White of Topeka Capital Markets Inc.
Take Away #3: Many companies announce dividend changes once a year, fueling speculation about Cook’s plans.
Key Facts and Figures:
- Apple approaches the anniversary of last year’s announcement, which came on March 19.
- Tim Cook reinstated dividends after a 17-year hiatus, breaking with a pattern set by co-founder Steve Jobs.
- Dividend predictions from analysts surveyed by Bloomberg range from #3.31 to $5.30 a share.
- Apple spokesman Steve Dowling declined to comment on the company’s plans for the dividend or repurchase program.
Take Away #4: Apple has seen a nearly $300 billion decline in value prompting investors like Einhorn to push for more cash for investors.
Key Facts and Figures:
- Laurence Balter, of Oracle investment Research rates Apple a buy.
- Balter estimates Apple could spend $10 billion in a one-time payout, while boosting the quarterly dividend to $3.31 per share.
- Apple generated $42.6 billion in free cash flow in fiscal 2012, a 28% increase from a year earlier.
- Einhorn’s Greenlight, is urging Apple to issue high-yielding preferred stock to carve out more cash for investors.
Take Away #5: Apple could increase its payout incrementally.
Key Facts and Figures:
- The company may raise its current quarterly payout of $2.65 by 13% to about $3 a share, for an indicated annual yield of 2.6%.
- That would give it one of the highest yields among its peers, after Intel Corp. (INTC) and Microsoft Corp. (MSFT).
- For any higher return of cash, Apple could borrow against money held overseas, a move that would take advantage of low interest rates without incurring taxes from repatriation.
- Apple could also triple its buyback program to $30 billion over three years.
Take Away #6: After commanding a premium for most of the past decade, Apple is trading at a discount of 33% to the S&P 500 Index on a price-earnings basis.
Key Facts and Figures:
- Apple’s slump has pushed its price-to-earnings multiple below Microsoft’s this year for the first time since January 2002.
- Apple is trading at about 10 times earnings.
- Microsoft, which has suffered as smartphones have replaced PCs, is valued at about 11 times earnings.
Take Away #7: Apple has been grappling with investor criticism about its cash for years.
Key Facts and Figures:
- Apple suspended its dividend in 1995 amid leadership upheaval and dwindling market share.
- Near bankruptcy before Steve jobs returned in 1997, the cash balance has swelled since then.
- Apple will likely announce a dividend or buyback by the end of the year, possibly as early as April.
*To view original article from www.bloomberg.com click here.