To Dividend Or Not To Dividend?

What to do with all that money? That’s the question facing Apple after it revealed its piggy bank was close to US$100 billion. CFO Peter Oppenheimer said the company is “actively discussing” how to use that money, which renewed the call for a dividend among many investors and analysts. Apple’s hoard exceeds the market value of all but 26 firms in the Standard & Poor’s 500 index.

The San Francisco Chronicle quoted David Rolfe, chief investment officer of Wedgewood Partners Inc., as saying: “They have turned into the First National Bank of Cupertino. Common sense dictates that they don’t need a cash hoard of $150 billion.” He was referring to his estimate that Apple’s holdings could reach $150 billion by the end of 2012. Mr. Wolfe’s firm manages Apple stock among its $1.3 billion in assets.

Brian White, an analyst at Ticonderoga Securities LLC, echoed Mr. Rolfe’s call for an AAPL dividend, saying: “It’s going to be a gusher when they tap into that thing. It’s like tapping into an oil field out in Texas.”

However, not everyone agrees with the call for a divided. The Chronicle spoke with Trip Chowdhry, an analyst at Redwood City’s Global Equities Research, who felt that Apple should hold onto its cash for “giant growth opportunities” and said: “If Apple declares a dividend, it would be an indication to me that it’s time to get out of the stock.”