In just over one week, it will have been exactly one year since Apple (NASDAQ:AAPL) announced its plans to reinitiate its dividend while instituting a share repurchase program. A day before the announcement, Apple said it would conduct a conference call specifically to discuss its swelling cash balance, making it clear that cash would be the only topic of discussion.
The vast majority of public companies tend to stick with dividend payouts on an annual basis before making changes, unless circumstances dictate otherwise. With that one-year mark quickly approaching amid rising investor discontent, is the timing right for another cash announcement?
Topeka Capital Markets analyst Brian White sure thinks so. The analyst believes that since David Einhorn's high-profile spat and Apple's annual shareholder meeting are now both in the rearview mirror, the "timing could be right for a bigger deployment of cash." At current trajectories, White is modeling for Apple's cash balance to grow to $241 billion by the end of fiscal 2015 -- over $100 billion more than it current has.
Since Apple clearly has well more than it realistically needs, White estimates that Apple could afford to boost its quarterly dividend payout from current levels of $2.65 per share up to a range of $3.75 to $5 per share. Those payouts would represent dividend yields of approximately 3.5% to 4.6%.
Apple's repurchase program is intended to offset equity dilution from share-based compensation, but White thinks the Mac maker could increase this authorization to as high as $100 billion over five years. Compare that to the current program that started with an authorization of $10 billion over three years ($2 billion and one year completed so far).
Finance guru Aswath Damodaran once suggested that Apple implement a "shockingly large" buyback program. I think $100 billion would qualify. The timing is absolutely right for a dividend boost. What are Cook & Co. waiting for?
Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.