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02-10-2012, 12:43 PM #1
Apple Considering Sizable Dividend for Shareholders
On Friday, the recent bullish trend of the markets deviated for a beat as heavy selling and profit taking were observed across equities. But among the handful of stocks to remain in positive territory today is Apple. And, as of this writing, AAPL remains within $5 of the $500 per share threshold.
As MMi reported earlier this week, AAPL at $500 wouldn't necessarily signal a major wave in selling. Leading market watchers continue to maintain price targets of between $600 and $650 for AAPL. But what remains the biggest mystery surrounding Apple and its enormous market cap is what the company will do with the humongous pile of cash its presently sitting on.
Some believe the company will soon pay a dividend to investors.
Analyst Shaw Wu with Sterne Agee thinks that a yield in the 2 percent to 3 percent range would be a huge hit among shareholders and the investment community at large. “The reason is that the company’s strong cash flow should be able to fund this (which we estimate could be $75-$80 billion in the next four quarters vs. the $45.3 billion we estimate the company generated in the last four quarters),” Wu says.
And, of course, it should be noted that analysts aren't the only ones predicting a dividend to stock holders. Apple executives have said that they are “actively discussing” options for the $96.7 billion Apple has in the bank.
“We’re actively discussing uses of our cash balance, and have no specifics to share,” Apple CFO Peter Oppenheimer said during January's earnings call. “In the meantime, we continue to be disciplined with cash, and are not letting it burn a hole in our pockets.”
02-11-2012, 03:10 AM #2
Ha. Not a chance. Dividends are horrible for many reasons.
1. Companies that pay out dividends have nothing better to do with their money which reflects poorly on the company. AAPL is no exception.
2. Dividends are taxed. It would make more sense to keep the assets of the company intact and keep the stock price growing.
02-13-2012, 08:27 AM #3
1. So big companies like Boeing, GE, UPS, McDonalds etc really have nothing better to do with their $$$?
2. Yes dividends are taxed. So is capital gains on any stock you sell for a profit.
Dividends slightly reduce the risk that comes with stock purchase. They also encourage shareholders not to sell off at certain indexes like $500 or $600 which encourages the stock to continue to climb.