Renewed chatter about a higher dividend from Apple Inc. helped goose the company's stock on Monday. Howard Ward, chief investment officer at Gamco Investors Inc., told Bloomberg that (he believes) Apple will announce new plans for returning more of the company's huge cash hoard to investors by the end of April.
“We’re going to get an announcement from the company as to how they intend to reallocate some of their cash,” Mr. Ward told Bloomberg. “They will put a floor under their stock at a higher price than it is today.”
You might remember Mr. Ward as the person who said in December of 2011 that Apple would institute a "significant" dividend in early 2012. And guess what, Apple did just that. On March 19th, 2012, Apple announced a $10 billion per year dividend and a $10 stock buyback program.
That puts Mr. Ward's comments in a whole other class from people like Doug Kass, the hedge fund manager who tweeted a rumor that Apple would announce a stock split at its annual shareholder meeting, sold some shares on the resulting bump, and then distanced himself from that same rumor.
Which could be why shares of $AAPL closed higher at US$437.87, a gain of $6.15 (+1.42 percent), on moderate volume of 16.9 million shares trading hands. The stock had been trading in negative territory through the day after more analysts talked about order cuts in Apple's supply chain.
The chart below shows that $AAPL spiked at about 2:40 PM EDT. The price increase was accompanied by a jump in volume, and both moves coincided with Mr. Ward's comments.
AAPL Chart for Monday, March 11th, 2013
Source: Yahoo! Finance
It's important to note that Mr. Ward isn't saying why he thinks Apple will be making such a move at that time. He didn't name sources or claim that his information came directly from Apple. Shares of $AAPL are, however, his company's largest holding, and his last comments on the subject proved quite prescient.
The reality is that a March/April time frame is just as reasonable a guess as to win Apple might modify its plans for cash as any other. Apple CEO Tim Cook has stated repeatedly in recent months that the company's board of directors—of which he is a member—are constantly looking at what to do with Apple's cash hoard.
Apple has at least US$137 billion, and this is after the above-mentioned dividend and stock buybacks. The company's shareholders and analysts alike have said that Apple needs to be more aggressive about returning more of its cash to shareholders.
In light of just how much money the company has and just how much the stock as fallen—some 37.6 percent since its all-time closing high of $702.10 on April 19th—it has been widely assumed that Apple will undertake some kind of new initiative sooner or later, and preferably sooner.
That makes an April time frame a solid educated guess.
*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.