Apple may up dividend by more than 50 percent, say analysts
The company could raise its quarterly dividend to $4.14 a share as a way to spend some of its cash on investors, say analysts polled by Bloomberg.
Apple will likely tap into its hefty hoard of cash to fund a dividend increase of more than 50 percent, according to a consensus of six analysts surveyed by Bloomberg.
A quarterly dividend rise of 56 percent would cost Apple $4.14 per share, or $15.7 billion a year. That seems like a lot of money to most companies. But Apple is sitting on cash of $100 billion and has been under pressure to return some of that money to its shareholders.
Greenlight Capital's David Einhorn, a major Apple investor, has criticized the company for not sharing its huge treasure chest with stockholders. Though Apple kicked off its dividend and a stock buyback, Einhorn has aruged that issuing higher-yield preferred shares would put a bigger smile on the faces of anxious investors.
Some of Apple's cash hoard is tied up overseas, but the company could handle a healthy dividend increase, says Piper Jaffray analyst Gene Munster. A 56 percent jump would be healthy indeed, according to Bloomberg. The resulting 37 percent yield would be higher than that offered by 86 percent of the dividend-paying corporations on the S&P 500.
All the analysts polled by Bloomberg agreed that a dividend boost is coming, but estimates ranged from $3.31 to $5.30 a share. Other scenarios might also play out.
The company could spend $10 billion on a one-time payout and up the dividend to $3.31 a share, says Oracle Investment Research analyst Laurence Balter. Apple could also bump up its dividend incrementally, according to Bloomberg, initially raising it to $3 a share.
Whatever Apple decides, all the analysts believe the company must act decisively to revive its sinking stock price and lower valuation.
"There has been almost a $300 billion decline in value of this company," Balter told Bloomberg. "Any CEO at the helm of any U.S. or international company that sat at their desk idly while this happened would be shown the door."