Apple, Inc. Will Likely Boost Its Dividend Again in April

At Apple's (NASDAQ: AAPL  ) annual shareholders meeting last week, CEO Tim Cook reiterated that its board will consider expanding its plan to return cash to shareholders. The current plan has authorized up to $60 billion in share repurchases by the end of fiscal 2015, as well as a dividend of $12.20 per share per year.

Will Apple boost its plan for returning cash to shareholders? In the video below, Fool contributor Daniel Sparks explains why he thinks Apple will boost its dividend by 15%, at a minimum. He suggests another 15% would be perfectly reasonable considering that Apple is only paying out a fraction of earnings while still raking in loads of cash. Further, Daniel explains why he thinks Apple is an excellent dividend stock for long-term investors.

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Comments from our Foolish Readers

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  • Report this Comment On March 06, 2014, at 1:20 PM, WineHouse wrote:

    Thank you very much for basing your "prediction" on earnings / cash flow considerations (rather than "cash-on-hand" considerations).

    I do have a question, however: what proportion of Apple's current earnings and current cash flow is domestic, as opposed to overseas? To speak of an overall "29% payout ratio" without indicating what that represents in terms of domestic net earnings may be a bit incautious, particularly in this case of a company whose huge foreign earnings and cash holdings are well known,.As a shareholder who welcomes dividend growth, I certainly would not want to see Apple go into debt in order to pay its dividends (or acquire new intellectual property or companies).

    Thank you in advance for your reply.

  • Report this Comment On March 06, 2014, at 1:35 PM, TMFDanielSparks wrote:

    @WineHouse,

    Thanks for your thoughtful comments. And I'm glad the video was useful for you. For your answer, this article should help: http://www.fool.com/investing/general/2014/02/13/apple-inc-n...

    Considering the size of Apple's dividend and its repurchase program, debt would likely be needed -- as Apple is already accessing debt markets. But given the low rates available today and the consistency of Apple's cash flow, I don't think debt would be risky.

  • Report this Comment On March 06, 2014, at 3:41 PM, luxetlibertas wrote:

    Share buybacks are much more flexible as a way to give back money to the shareholder, and these are not taxed, unlike dividends.

    *Structurally* borrowing money to pay dividends is not financially sound, and not like Apple.

    So, as a Apple shareholder, I would far prefer the company going slow on dividend raises.

  • Report this Comment On March 06, 2014, at 4:54 PM, TMFDanielSparks wrote:

    @luxetlibertas,

    I don't mean to say that debt would be needed to boost the dividend directly. Instead, debt may be smart (as Apple is already doing) to help support both the repurchase program and dividend combined, since it would be even more costly to repatriate money.

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