2-3% sure wouldn’t be significant. And it wouldn’t do much to slow the growth of the cash hoard. A 2% yield would pay out ~$10 per share. With under one billion shares outstanding that would cost Apple less than $10B per year. The article states that Apple may grow its cash by $70-80B this year alone. A 2% dividend is sort of a joke for Apple but if it shuts up all of those people calling for a dividend I say so be it. Personally, I want to see how big of a cash pile Apple can grow. Sure, it isn’t the smartest thing to do financially in such a low interest environment but it really is mind boggling. In two years, Apple could have $250B in cash.

adamthompson32 - 10 February 2012 11:19 AM

2-3% sure wouldn’t be significant. And it wouldn’t do much to slow the growth of the cash hoard. A 2% yield would pay out ~$10 per share. With under one billion shares outstanding that would cost Apple less than $10B per year. The article states that Apple may grow its cash by $70-80B this year alone. A 2% dividend is sort of a joke for Apple but if it shuts up all of those people calling for a dividend I say so be it. Personally, I want to see how big of a cash pile Apple can grow. Sure, it isn’t the smartest thing to do financially in such a low interest environment but it really is mind boggling. In two years, Apple could have $250B in cash.

AT

I posted a similar thing this morning on another board using 3% as an example.  I agree completely.

Hi,

Anyone know how a dividend would effect naked short sellers.  At times past massive naked short selling has been used to beat down AAPL.  I wonder if a dividend would be a disincentive to that criminal behavior.

Thanks.

Imagine if AAPL was able to earn 5% on AT’s $250B!!!

If they do have dividends how are they calculated. Is it based on EPS? Based on share price? I read that $10 a share may be the dividend, just want to know where the number comes from.
Thanks

galleybob - 10 February 2012 03:59 PM

If they do have dividends how are they calculated. Is it based on EPS? Based on share price? I read that $10 a share may be the dividend, just want to know where the number comes from.
Thanks

How are what calculated? Yield % = dividend dollars per year divided by share price.

Dividends come from cash flow, not net income. However, if you want to see how conservative a $10 (or roughly 2%) dividend would be for Apple you can look at its estimated net income for the year of roughly $50 per share and see that $10 is super, duper conservative. Apple’s payout ratio would be well below 20% of cash flow. I worked for a mid-cap publicly traded retail company (different industry than Apple, obviously, even though Apple has retail stores) but our target payout ratio was ~60-70%. We were uncomfortable when it went above 70% and discussed increasing the dividend when it went below 60% for a period of time. At a 2% yield Apple would still grow its cash insanely fast.

A $10 dividend does not make much of a difference against $500 share price. When the share price is within $100 it makes a dividend makes a large psychological impact. But when the stock price is high, its psychological impact is very low.

I do not think that Apple dividend is going to either loose investors or gain investors, or even make the price any less volatile.

Apple needs to show that there is a preservation of the operating margins in the face of Moore’s law and in the face steep advances in hardware/display technology and commoditization of software. Also Apple should demonstrate that volume pricing of competitors does not affect Apple’s operating margins. This becomes the inevitable key to sustaining its PE. Otherwise the market will pull down the PE as the large capitalization takes root. By $500b valuation, Apple will necessarily feel the impact of the market’s continuous erosion of its PE multiple.

So what should Apple do and keep others from doing it?

—Keep technology innovation at the forefront of consumerist revolution
—Keep product usability at the forefront of the consumer
—Bring new products and services to fundamentally affect the quality of life of people
—Revolutionizes the use-value of the products
—Be Number One in providing affordable products of class for the huge populations of India, China and the Far East.

Apple’s cash hoard is very small when we look at these competitive spaces that it has to conquer.

This article at SA makes as much sense as anything regarding an upcoming dividend for Apple.  I feel that it will happen.  One of the reason I went ahead and went all in instead of waiting for a pullback.  Also makes sense from a standpoint of the recent run up.