Why Apple's $16 Billion Payout Could Disappoint

In the following video, Motley Fool senior technology analyst Eric Bleeker discusses some chatter coming from Bloomberg this week -- that Apple's (NASDAQ: AAPL  ) dividend could jump up to $16 billion annually, which would equate to a 3.7% yield and a 56% leap from current dividend levels. That would put Apple near the top of technology's biggest dividend payers.

Company Yield
Intel 4.2%
Apple (Projected) 3.7%
Microsoft 3.3%
Cisco 2.6%

Yet, Eric also notes that in the short run, investing is all about expectations. Apple is typically very conservative with its cash management, and a $16 billion payout would roughly equal its cash generated in the United States. If it were to decide on a lower dividend boost such as a 30%, 40%, or 50% raise, that would still be a dramatic raise but would be below expectations.  Such a situation could actually leave investors disappointed despite Apple still paying a dividend on par with or above Microsoft's level. 

In the long run, such fears would be washed away, especially if Apple sees stronger growth in the latter half of this year or sets to raising its dividend or accelerating buybacks in coming years. However, Eric warns investors that big dividend expectations could lead to unexpected trading results in the short run. To see his full thoughts, watch the video below. 

There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, after the company's major backslide recently, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


Read/Post Comments (5) | Recommend This Article (5)

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 March 19, 2013, at 12:25 PM, techy46 wrote:

    Yawn, blah, blah.

  • Report this Comment On March 19, 2013, at 1:32 PM, SyGuy wrote:

    Using the billions on which US taxes have been paid to reward the shareholders is the right way to go. After all the shareholders own the company and that money should be distributed to them.

    The billions outside the country are sufficient for any R & D and/or M & A that the company decides to do.

    Apple could become the first stock to be simultaneously both a value and a growth stock.

  • Report this Comment On March 19, 2013, at 1:35 PM, jordanwi wrote:

    Just write! Damn your videos! Damn them!

  • Report this Comment On March 19, 2013, at 4:02 PM, donggua wrote:

    Analysts, consumers, media and investors have unrealistic expectations for Apple, who has just had record profits last quarter, sold more iphones than ever, and have record cash in its balance sheet. What Apple needs right now is for everyone to take a deep breath and get real. Apple is a company that will not have revolutionary products every year. Apple will not have blow out earnings every quarter. Most of all, no one--including the media--should expect Apple products to make life better. Apple makes great gadgets--that's all. Some are greater than others. But everyone should stop having such unrealistic expectations and high hopes that Apple cannot possibly fulfill.

  • Report this Comment On March 20, 2013, at 3:16 PM, WestBend1 wrote:

    Second the motion of jordanwi.

    I want to READ the articles on this site. That way, I can simply re read something if I want. I don't have to go click a buttom, wait for it to reload and buffer, etc.

    If I see that the "article" is a video, I skip it.

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