3 Companies That Are Shortchanging You

I'm a fan of dividends, plain and simple. I believe good, stable dividends say a lot about a company, including the strength of its business and management's view of shareholders. Not to mention that dividend-paying stocks have shown a tendency to outperform their nonpaying counterparts.

Sure, there are good reasons for a company not to pay a dividend, but if you ask me, there are many more bad reasons for not paying a dividend. And I happen to think that these three companies are badly shortchanging their shareholders by keeping the d-word out of their vocabulary.

Can we please see an iDividend?
Apple (Nasdaq: AAPL  ) , the company that has made one of the greatest comebacks in corporate history, is probably No. 1 on my list when it comes to companies that need to get on the ball and start paying a dividend.

Before I say anything more, let's be clear about one thing: Tech companies can and do pay dividends. Intel (Nasdaq: INTC  ) currently yields a tasty 3.1% and Oracle (Nasdaq: ORCL  ) at least started making an effort last year. We can even find dividend payers among smaller tech companies like United Online and China's Giant Interactive. So I don't want to hear "tech companies don't pay dividends."

Getting back to Apple, take a gander at the company's balance sheet. At the end of the year, it had a massive $25 billion stockpile of cash and equivalents and not a lick of debt. Wow, goodie! What an impressive balance sheet! But guess what, investors? That cash is sitting around doing diddly-squat for you. A close reading of Apple's most recent 10-K filing shows that the interest rate earned on that cash was 1.4% for 2009. That's just plain ugly.

And it's not like the company has a legitimate use for all of that cash. Over the past 12 months it produced $12 billion in operating cash flow and spent a piddling $1.2 billion on capital expenditures. As for acquisitions, the company hardly has a track record of making any acquisitions, let alone multibillion-dollar acquisitions.

Bottom line? That cash is just accumulating dust. Man up, Apple, and start doing right by your shareholders; start paying a dividend.

Google needs to Google "shareholder friendly"
Fellow tech hotshot Google (Nasdaq: GOOG  ) is right there with Apple when it comes to having a ridiculous amount of cash on its books. At the end of the year, the company reported $24 billion in cash and equivalents.

Google's cash retention isn't quite as egregious as Apple's, because the company does tend to spend a good deal of money on acquisitions. It's also recently shown a willingness to launch significant new capital projects.

But still, Google produces billions in free cash flow every year, which means that it's far more likely to add to its bank account than tap it. And while the smaller snap-on acquisitions that Google has mostly focused on, and testing the waters in new business areas, may be a fine idea, the kind of move that would make a dent in that cash pile would probably not be one that would serve shareholders well.

At the end of the year, Google held $3.7 billion in government agency securities, $2.5 billion in government notes, $2.1 billion in munis, $2.8 billion in corporate debt, and $1.6 billion in agency residential mortgage-backed securities. Is this an Internet advertising specialist or a fixed-income bond fund?

Divest the mutual fund, Google, and put the money back in the hands of your shareholders.

Think about the health of your shareholders
Health insurer WellPoint (NYSE: WLP  ) is hardly the only dividend holdout in its industry. The dividends at UnitedHealth (NYSE: UNH  ) and Aetna (NYSE: AET  ) are complete jokes, while others like Humana join WellPoint in paying nothing at all.

Sure, sure, bring on the "yeah, buts." The industry has been rocky lately, there's the threat of health-care reform, and cash balances need to stick around to pay off insurance claims. As far as health-care reform goes, that's pretty much a nonissue at this point. If something actually does squeak through, it will likely be completely toothless and have little negative impact on the major insurers.

As for the other excuses, when I look at WellPoint's cash flow statement, I see that it has spent close to $17 billion on share buybacks over the past four years, so apparently management thinks it has some extra cash to play with.

Surely all those buybacks are shareholder friendly and good, right? To put it lightly, I hate share buybacks. In theory they're fine, but then again, Communism is also fine in theory. Too many companies have spent too much shareholder cash making ill-advised buybacks.

Get your hands on some good, sturdy pens, WellPoint, and start signing some dividend checks.

Now don't get me wrong, I commend all three of these companies -- Apple, Google, and WellPoint -- for building such successful businesses. But for the sake of their shareholders, I think all three should take the padlock off the vault and start sharing the wealth.

Ready to see companies that do pay back their shareholders? Fellow Fool Todd Wenning has the best dividend stocks of the decade.

Intel, UnitedHealth Group, and WellPoint are Motley Fool Inside Value picks. Google is a Motley Fool Rule Breakers recommendation. Apple and UnitedHealth Group are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a buy calls position on Intel. The Fool owns shares of Oracle and UnitedHealth Group. Try any of our Foolish newsletters today, free for 30 days

Fool contributor Matt Koppenheffer owns shares of Intel, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants ...


Read/Post Comments (30) | Recommend This Article (83)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 16, 2010, at 4:14 PM, Superdrol wrote:

    In this economic environment, investors who are not Goldman Sachs employees need some kind of fair return on their investment. Within holding cash with no kind of regard to shareholders is not a company I want to be a part of.

    Stock spilts (to lower the price), buy backs, special dividends (one time), any thing to reward shareholders for their loyalty.

  • Report this Comment On February 16, 2010, at 5:47 PM, OPTIONNUT wrote:

    Tech companies tend to build up their booties and conquer other promising little fish...my thoughts are that these companies are bought for the growth and stock increases...if this does not occur...give them the dump!

  • Report this Comment On February 16, 2010, at 6:12 PM, Scaooba wrote:

    UnitedHealth's dividend has been a big joke for a long time. It keeps getting recommended and for what?? The stock doesn't move. I held it for 5 years based on one of MF's newsletters to which I subscribe and finally just got tired of it. Was able to sell for just barely over what my costbasis was. Unlike a lot of other stocks that pay a decent dividend, where you might want to wait and still make money, it was unproductive to hold UNH as long as I did. And still, keep seeing rec's for it.

    Don't waste you time on UNH, and you also won't be paid squat for holding it! You'll never make any money on this dog. Wonder where all their profits go?

  • Report this Comment On February 16, 2010, at 6:17 PM, lutece7 wrote:

    Why does this claim that Apple is mistreating its stockholders by not paying dividends, why does this same claim have to be repeatedly written about by Fool staff. Isn't once enough? We got your point the first time you wrote this.

    Doesn't the author of this think he should point out the reasons Apple wants to have $25 Billion in cash reserves? It makes me wonder if he knows why.

    1. A large cash reserve prevents a hostile takeover. They would have been taken over a long time ago, if they hadn't had large cash reserves... by Sony, by Microsoft...

    2. stockholders feel like Apple has enough cash that they will be able to ride out any economic storm or worldwide catastrophe (even storms much larger than the recent one), so stockholders are more likely to buy AAPL, and thus the stock stays higher with a large cash reserve policy.

    Instead of getting a dividend, let the stock continue to rise. With a large cash reserve, it is more likely to rise higher. Just sell a couple of shares every once in awhile, and think of that as your dividend.

  • Report this Comment On February 16, 2010, at 6:24 PM, EquityBull wrote:

    Both apple and google should issue dividends. I agree. A small $4/yr dividend for apple gets them to a 2% yield or they could even go $6/yr which is 3% and raise every year. Even at current cash flow that is less then 50% payout ratio and they still have that pile O cash.

    I'd say they do a one time cash dividend of $10 to shareholders then issue a 4% annual dividend based on current price which is $8/share. This leaves room to raise every year and leaves a pile of cash in the bank for a rainy day still.

    They are losing money ever year on that cash to inflation. it is not getting deployed and apple is unlikely to use it in acquisitions. I think Apple could use it to buy Adobe and Jobs could stop knocking flash and instead embrace it for his own purposes.

  • Report this Comment On February 16, 2010, at 6:33 PM, CarrieMike wrote:

    I'll add a 4th that should be paying a dividend now: BRK.b. Buffet has refused all requests for dividends up to this point but now that the stock has split and is trading daily on the S&P, he should step up and pay stockholders what they deserve for trusting him.

  • Report this Comment On February 16, 2010, at 6:54 PM, emptygestures wrote:

    Let's not forget Walmart.. That is some ultimate betrayal to shareholders.

  • Report this Comment On February 16, 2010, at 7:03 PM, jackmitch wrote:

    The track record of companies using huge build-ups of cash is not impressive. All too often, large cash balances have led to ill-advised acquisitions or diversifications with disastrous consequences. At the risk of sounding terribly cynical about corporate governance (and before retirement I served as a senior corporate executive and as a member of several corporate boards), I trust my own judgment about the use of cash more than I do that of most corporations. Therefore, I have a strong preference to see companies in which I invest pay a reasonable dividend.

  • Report this Comment On February 16, 2010, at 7:09 PM, TMFKopp wrote:

    @lutece7

    "Isn't once enough? We got your point the first time you wrote this."

    Apparently once isn't enough... Apple still doesn't pay a dividend.

    "Doesn't the author of this think he should point out the reasons Apple wants to have $25 Billion in cash reserves? It makes me wonder if he knows why."

    Do you really believe these are good reasons for Apple to hang onto that much cash?

    Have you looked at Sony lately? That company has got a lot of work to do to get itself righted. If Sony tries any sort of major acquisition the shareholders should scream bloody murder.

    As for Microsoft, I can't figure what the strategic sense would be in an acquisition like that. Not to mention that you're talking about a company with $30B in net cash (MSFT) trying to take over a company with a $184B market cap (AAPL). Financing that would be a nightmare. And how much of a premium do you think AAPL's shareholders would demand from MSFT? Say, 20%? That would bring the purchase price up to around $220B.

    For the simple reason of MSFT pride that's not happening, but beyond that there are plenty of other reasons.

    So, in short, no, the cash isn't needed for a takeover defense... besides, if they're worried about a takeover, why not just put a poison pill in place?

    As for riding out an economic storm, this is just as silly. The company produces tons of cash every quarter. If you really think the company is going to be cutting it close any time soon, then shareholders have a lot more to worry about than cash on the books -- a drop in performance like that would clobber the stock.

    But assuming something that drastic won't happen (and I imagine most shareholders don't think it will) having all that cash on the books is a big waste for shareholders.

    Matt

  • Report this Comment On February 16, 2010, at 7:48 PM, Superdrol wrote:

    Regarding this issue, actually I sent an e-mail to the Apple investor relations about this. The representative basically stated that there is nothing 'new' in the works. I primarly am more hung up about Apple, because I have a current stake in it (albeit it was reduced from earlier) and I do think it is a good growth company.

    I also think that their future prospects are good as well, considering that they are the leading innovators in their technology. If anything, they are a gift to AT&T, a lot of people are willing to buy expensive iPhones and subsequent 'paired' products (i.e. computers, ipod, itouch, etc).

    With that said, they have more than sufficient cash to give a dividend. It does not have to be a 'committed' regular dividend, however; a small one would be nice.

    If you were lucky to own Apple in 1996-1999 (when they ceased the dividend in 1996), you'd have gained nothing those 3 years.

    Ok, ok so it is reflected in the stock price right ? So realistically how probable is it for the stock to double @ $203.00/share ? I'm bearish on Google, esp after the China's fiascal, they are shutting off a huge market to make a 'point'.

    Despite stocks spilts not changing anything fundamentally in a company, it is more of a psychological aspect, plus it 'caters' to smaller retail investors.

    Sooner or later, the stock goes up because the 'bids' greatly outweigh the 'asks'.

    My point being, there is an opportunity cost towards any investment, and at this point I am not comfortable being exposed to an equity market which contains more risk vs. fixed income, from a company unwilling to reward investors.

    Furthermore, and to add insult to injury, the iPad product is the most ridiculous thing that I can think of towards putting 'retained earnings' towards. It is an oversize iTouch.....again oversized iTouch. I am flat out disgusted that that is their idea of retained earnings in the interm.

    - Activision did a share buyback and implemented a dividend.

    -Research In Motion (buyback)

    -Amazon.com (buyback)

    -Philip Morris (buyback)

    -Nucor (increased dividend)

    -ConAgra (buy back)

    -Sara Lee (buy back)

    -3M (buy back)

    ..........even Apple's competitors are doing something for their shareholders.

    Anyways, end rant, but fact of the matter is that I don't view Apple as a good investment in which they are unwilling to meet halfway. Furthermore, they still have 'competitors' who will continue to try and take market share away from them. The instant those growth rates don't match up to par, say goodbye to your investment. (or if something happens to Steve Jobs which they don't disclose on purpose).

    Good products, poor investment.

  • Report this Comment On February 16, 2010, at 7:59 PM, langco1 wrote:

    buffett having trouble paying for his ill timed and overpriced purchase of burlington first split his b shares to try and fool the public into buying and bidding those shares up then had to start selling other assets at bad times to make up the differance.the days of buffetts buy and hold forever are gone forever!before it even closes burlinton is a huge loser...

  • Report this Comment On February 16, 2010, at 8:03 PM, Superdrol wrote:

    * The 3M was a typo, they increased their dividend. They are not the only companies implementing all these changes though.

    Apple is the next Microsoft in my opinion. Microsoft hoarded cash for such a long time, their growth prospects dried up, the stock moved sideways for the last 10 years, and their products aren't what they used to be. Windows Vista anyone ?

    Wal-Mart/Microsoft are 2 examples of investments where you took on the risk of owning equities, and being compensated by little/no capital appreciation and a tiny dividend, when you could have been invested in fixed income munis with tax deferrment.

    I think sometimes people forget about CAPM. If you are going to take a certain risk, CAPM states that you should be theoretically compensated accordingly in a proportional reward.

  • Report this Comment On February 16, 2010, at 9:41 PM, TMFKopp wrote:

    @superdrol

    Of course the end result on MSFT is that management finally gave in and started paying a dividend. Hopefully Apple will eventually come to the same conclusion.

    I think for some of these companies there may be the thought that "hey, we're a fast-growing tech company, we're too young and hip to pay a dividend!" And I will concede that there's something to that -- investors definitely look at dividend-paying companies differently than non-payers.

    Not that it should matter to management -- they should still be doing what's in the owners' best interests.

    Matt

  • Report this Comment On February 16, 2010, at 11:28 PM, Superdrol wrote:

    Eventually Microsoft got the picture and it is a good thing too because the stock has not moved anywhere. At all. Windows vista is a disaster and windows 7 isn't that much better. I still prefer XP or NT. Sad to say technology is the only sector where you van come up with crazy pipedreams that people will believe in. Case in point the tech bubble.

    Apple still has competitors who will be competing for market share. This in turn can create roadblocks for continued growth. Amazon kindle and blackberry are not just going to close up shop and let apple have all the spoils. Apple is just flat out expensive for no dividend google is too.

    The money that they have in the bank getting interest that they are not sharing with shareholders yet using their capital isn't my thing. If I wanted "safety" I'd just have bought the QQQQ instead which I wish I had done.

    On their most recent quarter transcript some analyst brought up the issue and the executive just said "you already know our stance on cash" and that was it.

    I don't think Apple thinks they aren't too cool, I think it is just a "friendly arrogance" attitude on their part. Most likely b/c of the iPhone they think they are the end all be all.

  • Report this Comment On February 17, 2010, at 12:14 AM, lutece7 wrote:

    TMFKopp wrote:

    "Apparently once isn't enough... Apple still doesn't pay a dividend."

    Apple isn't listening to you. Do you think if you repeat this enough, they will?

    "Have you looked at Sony lately?"

    I was merely sighting historical examples. Some people say they would have taken over Apple in the late 90s if Apple hadn't had a huge cash reserves back then. I am not talking about now. There are other companies that could take over Apple if their reserves weren't so high.

    "As for riding out an economic storm, this is just as silly. The company produces tons of cash every quarter. If you really think the company is going to be cutting it close any time soon, then shareholders have a lot more to worry about than cash on the books -- a drop in performance like that would clobber the stock.

    But assuming something that drastic won't happen..."

    You think THAT is drastic? What if Iran or Pakistan were to set off a nuclear weapon. What if a dirty radioactive bomb were detonated in New York's harbor? 25 billion in cash reserves would look pretty prudent then. Apple could survive a LOT with those kind of reserves.

    Jackmitch wrote:

    " I trust my own judgment about the use of cash more than I do that of most corporations."

    Do you lump Apple in with "most companies." Or do you ever make a concession?

    Equitybull wrote:

    "They are losing money ever year on that cash to inflation"

    there is very little inflation now. So what are you worried about? Now, inflation could skyrocket any month now. Should that happen, then I will agree with you. But not till then.

    Superdrol wrote:

    "Good products, poor investment."

    Poor investment? wow. I sure have done well with them over the years. I think their products are better than "good". And so do a lot of other people. Well, time will tell if you are right about them not being a good investment. They have proven a lot of people wrong in the long run. I think they have a culture that just gets it, and gets it right. I am not betting against them, that is for sure.

    Nay sayers did't like the iPod, or the mouse, or when Apple brought them to market. Don't be so sure that the iPad won't find its niche. How can you call the iPad an iTouch with a bigger screen. Does the iTouch have the 3G option, no. Skype will be working on 3G enabled iPad by the time they are introduced. I think the iPad has uses we haven't even thought about yet.

    Superdrol wrote:

    "Apple is the next Microsoft in my opinion. Windows Vista anyone ?"

    what? how do you blame Apple for Vista? what makes you think Apple is headed to producing Vista? Microsoft tries to follow Apple, not the other way around.

    anyway, that is how I see it.

  • Report this Comment On February 17, 2010, at 12:34 AM, vgaymer wrote:

    Your fellow Fool Todd wrote my favorite Fool article to date:

    http://www.fool.com/investing/dividends-income/2008/08/28/st...

    in essence, I agree with you. The problem with relying on capital gains anymore is that you're relying on everyone else being a sophisticated value investor as well. With the ease in which shareholders can now use online brokerages unsophisticated investors (myself included I'm sure) can buy/sell with rationale that doesn't make a whole lot of sense from a value perspective.

    I'll spare you all the reasons I can give for preferring dividend-paying stocks, but in a nutshell, sustainable dividends in healthy companies just seem a much more objective value metric.

    Cheers,

    G

  • Report this Comment On February 17, 2010, at 12:34 AM, vgaymer wrote:

    Your fellow Fool Todd wrote my favorite Fool article to date:

    http://www.fool.com/investing/dividends-income/2008/08/28/st...

    in essence, I agree with you. The problem with relying on capital gains anymore is that you're relying on everyone else being a sophisticated value investor as well. With the ease in which shareholders can now use online brokerages unsophisticated investors (myself included I'm sure) can buy/sell with rationale that doesn't make a whole lot of sense from a value perspective.

    I'll spare you all the reasons I can give for preferring dividend-paying stocks, but in a nutshell, sustainable dividends in healthy companies just seem a much more objective value metric.

    Cheers,

    G

  • Report this Comment On February 17, 2010, at 1:30 AM, TMFKopp wrote:

    @lutece7

    "Apple isn't listening to you. Do you think if you repeat this enough, they will?"

    One vote doesn't decide an election either, but we still go to the voting booths (well, some of us at least).

    Shareholders own Apple. If they get worked up enough about the waste that the company is making with their cash, then perhaps a change will be in order.

    "You think THAT is drastic? What if Iran or Pakistan were to set off a nuclear weapon. What if a dirty radioactive bomb were detonated in New York's harbor? 25 billion in cash reserves would look pretty prudent then. Apple could survive a LOT with those kind of reserves."

    Honestly, I have no idea what to say to this. If a key part of your investment research is "is this company well prepared for a nuclear attack on the U.S." then we are clearly on different wavelengths. You may also want to consider GD or LMT. They don't have the cash that Apple does, but they'll do quite well if a major war is at hand.

    As I've already stated, if Apple finds itself in a position where it has to burn through billions of its cash hoard to just keep the lights on, then it's more likely that shareholders will tripping over themselves to get to the exits than sitting back saying "man I'm glad all that cash is there."

    Matt

  • Report this Comment On February 17, 2010, at 7:55 AM, at802 wrote:

    Add Berkshire Hathaway to non dividend payers who are doing a diservice to their share holders. With billions in cash, Warren Buffet has already admited that he will not be able to continue to produce the returns that he has made in the past. Clearly paying a reasonable dividend is the best way for Berkshire Hathaway to give value to its stock holders.

    Unlike some others I have never considered Warren Buffet a genius, he has accomplished what he has by hard work and common sense, which anyone of average inteligence can do. He has taken some very sound ideas; reinvesting profits and not spliting the stock to discourage trading, and taken them to the point of ridiculousness.

  • Report this Comment On February 17, 2010, at 9:31 AM, Superdrol wrote:

    Berkshire also does belong in the camp of non-dividend payers. Warren Buffett's investing strategy worked for a long time. Is he a genuis ? I think so, given the circumstances that he had to work with back in the past. There has not been anyone like him that lived during that era which does deserve recognition.

    With that said, Warren Buffett's era, you could buy stock and simultaneously short it in another market to take advantage of arbitrage opportunities. Not to take anything away from him, but I'd like to see how he would fare the next 100 years (of course that is not possible).

    I think buy and hold (with no strategy) is dead. I know many different people prior to this crisis who didn't have any target for their stocks. In a bull run, it is prudent to remember that stocks don't go up forever, even in a bubble. At some point you'll either sell it and make a profit or hold onto it the way down and forced to sell lower or at a loss.

    I value Apple's stock right now at $225-$230. I know a lot of analyst have their own thesis, but Wall Street's analysts are under a lot of 'office politics' which they gimmick their ratings and estimates so you have to do your own due diligence.

    I was at the airport back in Nov '09 and there was an old woman who owned Berkshire-A stock for quite some time. I didn't get into the specifics, but it seemed like she owned them for awhile and she was probably 75-80 yrs old. She told me that her investment advisor sold off some of her shares a few years ago and how angry she was. I was thinking to myself that was the best thing that ever happened to her because Berkshire, both A/B shares took a heavy hit and she was able to get out before the crisis with a profit. Also she's 75-80. Not wishing ill-will, but if you are not enjoying your money at that age when will you ? Not to mention the stock was barely close to even when I spoke to her.

    All this is common sense, but it still is not something that everyone follows. I didn't tell her that her investment advisor was correct and that she wasn't getting any return while she had to wait for the stock to climb back up.

    I'm not call Apple as a short sell or that they will go bankrupt. I made the statement for Windows Vista, then subsequently Windows 7 because it represents Microsoft's complacency being at the top. Apple does make good product, but they also nearly went bankrupt many years ago. Given the attitude Apple is conveying, they may eventually wind up like Microsoft.

    Not to mention cons about capital gains:

    -Reduction in an investment that you may want to have a full stake in that you initially started.

    -Commissions and transaction costs.

    -Reliance on other investors to also fully value the stock in the same manner.

    -etc, etc, etc.......

    I don't know what the future prospects are for the iPad. I just was not impressed by the product and I don't think it requires a 30billion+ cash hoard to implement. If it has 3G great, that's another fee to tack on to the already expensive bill.

  • Report this Comment On February 17, 2010, at 9:34 AM, clydejazz wrote:

    Maybe Apple and Google are building up cash to spend on lobbying.

  • Report this Comment On February 17, 2010, at 9:38 AM, clydejazz wrote:

    Maybe Apple and Google are building up cash to spend on lobbying.

  • Report this Comment On February 17, 2010, at 1:10 PM, mayach wrote:

    United health was supposively a hot health stock of the decade had the health care reform passed

    http://bit.ly/Stocktrainingvideo

    but unfortunately in the present state of health care bill UNH may not benefit that much but worth a look.

  • Report this Comment On February 18, 2010, at 12:40 AM, LazyOldMan wrote:

    Steve Jobs takes $1 per year for a salary at Apple so his real compensation is the horde of unrestricted stock they give him. That stock is growing tax deferred. If he paid a dividend he'd get taxed on all the dividends... So he would just be better off if the stock appreciated and he deferred the taxes. He is not against dividends the $50 Million or so he gets from Disney dividends gives him some pocket money to buy gas for the jet. I don't think Steve hates the stockholders or is "cheating" them. He has so much money that if he too an 80% pay cut it wouldn't even effect his lifestyle. That makes it easy to think only in terms of "what is good from me." Interestingly that is exactly what Matt is doing, too. Hey, It would be good for Matt if AAPL did pay a dividend. But, not for Steve... so lets have the board vote... Sorry Matt who are you again?

  • Report this Comment On February 18, 2010, at 3:01 AM, Doccus wrote:

    May i quote part of your article on my blog... frankly, im quite pissed at apple with the highhanded way they treat the OWNERS of their company..

    Doc Rock (aka Doccus)

    http://docrockstudio.blogspot.com/

  • Report this Comment On February 18, 2010, at 2:42 PM, cordwood wrote:

    UNH is a gimee gimee company....they continue to perpetuate the Bill Mcguire attitude.

  • Report this Comment On February 19, 2010, at 6:01 PM, lutece7 wrote:

    Matt,

    no, a nuclear bomb going off is not a key part of my investment strategy. I am an optimist actually. But the possibility is in the back of my mind. I was just trying to illustrate the reasons why Apple thinks they needs such deep pockets.

    Perhaps you are right and Apple should pay a dividend. Your article and this thread has raised some very good points. I just thought it was odd that this is the repeat of an article here on Fool that ran just a month or two ago. I took exception to the way you put it.... "Man up, Apple, start doing right by your shareholders". I thought it was inflammatory. Seems like there is a lot of anti-Apple talk written by the Fool.com staff.

    How much of a dividend would you recommend that Apple pay out? And down to what sum do you think Apple should reduce its cash reserve?

  • Report this Comment On February 20, 2010, at 2:30 PM, MariaFolsom wrote:

    Not inflammatory at all, Matt. It's perhaps painfully honest, but you are right about dividends. Apple should face the music and dance!

  • Report this Comment On February 22, 2010, at 2:34 PM, Superdrol wrote:

    Apple has been acting like a broken stock lately. Apple should do a one time dividend. I think $1 per share is fine. That would equate to 906 million or so. That's not a big one time commitment for a company that has billion and just had record quarterly earnings.

  • Report this Comment On February 23, 2010, at 4:08 PM, TMFKopp wrote:

    @LazyOldMan

    As of the most recent proxy, Stevey owns less than 1% of Apple's shares. So, frankly, shareholders shouldn't give a flying squirrel what is good for Jobs -- more than 99% of the company is owned by shareholders other than him, shareholders that would likely benefit from getting dividends.

    It's this kind of attitude -- "Steve is all powerful and gets to call the shots" -- that empowers CEOs all over to act in their own best interests while hurting the real owners, the shareholders.

    @lutece7

    "Seems like there is a lot of anti-Apple talk written by the Fool.com staff."

    There isn't any single viewpoint at the Fool, so we're all free to come to our own conclusions about any given stock. I'm sure there are Fool.com writers that like Apple as it currently stands.

    I don't know whether I'd call what I've written here more anti-Apple or pro-shareholder. I wouldn't bother castigating a lousy company for not paying dividends. It's because I think Apple is a good company that I think it's such a shame that shareholders are not getting a fair shake.

    "How much of a dividend would you recommend that Apple pay out? And down to what sum do you think Apple should reduce its cash reserve?"

    This is more or less back-of-the-envelope math, but... When judging the safety of a dividend, I often look at the cash flow from operations as a multiple of the total dividend payout. A multiple of 4 is more than comfortable, particularly for a company whose cash flows have been growing like Apple's.

    For the twelve months ending in December, Apple took in about $12b in CFFO, which means that they could potentially pay out $3b/year in dividends, or around $3.30 per share. That would give the stock a 1.7% yield which would be a good start.

    As for the cash currently on the books, I don't think a special dividend would be an awful idea, but if the company started paying out a regular quarterly dividend, I don't think the cash on the books would fire me up quite as much -- especially because then you could say that the cash on the books gives it a cushion to keep paying the quarterly dividend during rocky times.

    Of course this is probably all academic because I don't see the company changing its stance any time soon.

    Matt

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