Apple will announce its quarterly results next week, and investors expect the company to hike its dividend and the pace of its share buybacks, stated Citi technology analyst Jim Suva. The analyst told CNBC that Apple will hike the dividend by at least 10% in addition to raising the stock buyback program from $90 billion to $120 billion.
More dividends and buybacks expected
Suva thinks the iPhone maker will also expand and make some acquisitions, build new headquarters, increase its employee base and continue to innovate, although he added that this should not stop the company from increasing its dividend and share buybacks.
John Buckingham: Busting the Myths & Seven “Valuable” Themes for 2021 [ValueWalk Webinar slides and video]
John Buckingham's presentation titled, 'Busting the Myths & Seven "Valuable" Themes for 2021'. The webinar for ValueWalk Premium members took place on 2/23/2021, and was followed by a Q&A. Stay tuned for our next webinar, Q4 2020 hedge fund letters, conferences and more John Buckingham Principal, Portfolio Manager, Kovitz Editor of The Prudent Speculator newsletter Read More
The analyst said, “Now that still puts them interestingly in a position, where still having over $20 of cash per share.”
Commenting on if the market has already baked in the news of the dividend and stock buyback into the share price, Suva said it is pretty much in-line now with expectations. Over the past two years, the stock has risen to tremendous levels, and investors are becoming accustomed to the company’s cash return practices now. The analyst said Apple is a cash flow machine, and this is a “good problem,” suggesting that the company stands in a position to give more to shareholders. That is why investors are expecting a dividend increase and more share repurchases.
Apple has enough cash to venture into new businesses
Suva said that while the iPhone is the focus, and the company is launching new products such as new iPhone models and Apple Pay. In the future, there are even advanced and better products expected, “whether it’s advertising, TV broadcasting, Apple Passbook.”
The Cupertino, Calif.-based company is reflecting that they are not just ruling in smartphones but also expanding into wearable markets by rolling out the Apple Watch and services such as Apple Pay. Additionally, the company is seeking to expand its market by focusing on growth opportunities.
The Apple Watch reflects the popularity that Apple products enjoy as demand for the wearable has outperformed supply numbers, believes Suva. Following this, the shipment of some watches has been postponed to June and July. The analyst said that as of now, he cannot comment on the feasibility of an Apple car, but since the company has so muc cash, management can do whatever they want.