Apple Inc. (NASDAQ:AAPL) might provide its investors affected by its shares decline with the highest gain in the technology industry as the iPhone and iPad maker is prepared to increase its annual dividend by 56 percent to $4.14 per share, according to a report from Bloomberg.
Analysts speculated that the dividend payout would be around $3.31 per share to $5.30 per share. According to Bloomberg, Apple Inc. (NASDAQ:AAPL) could increase its payout incrementally from its current quarterly dividend of $2.65 per share to $3.00 a share, a 13 percent increase.
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Piper Jaffray analyst, Gene Munster opined that Apple Inc. (NASDAQ:AAPL) would be able to fund the annual payout of approximately $15.7 billion through its existing cash flow subject to extra taxes without using its earnings from overseas.
On the other hand Topeka Capital analyst, Brian White commented that Apple Inc. (NASDAQ:AAPL)’s accumulated cash has become excessive and recommended a buy rating on the shares of the tech giant with a price target of $888 per share. According to him, “The accumulation of cash has become excessive. It doesn’t matter which bearish scenario you forecast, they’re never going to need this much cash.”
Last year, Apple CEO Tim Cook reinstated a dividend after 17 years, which breaks the policy of Steve Jobs who aimed preserve the company’s capital. Cook also announced Apple Inc. (NASDAQ:AAPL)’s plan to repurchase its shares as the company faced increasing demand from investors particularly from hedge fund manager, David Einhorn of Greenlight Capital.
Einhorn demanded that the Apple Inc. (NASDAQ:AAPL) should unlock shareholder value by issuing a new security called iPrefs, which would yield around 4 percent. He also believed that the iPrefs could attract institutional investors. He succeeded in blocking company’s Proposal No. 2, which aims to seek the approval of investors before issuing preferred stock.
The iPhone and iPad maker previously stated it is actively discussing the process of managing its estimated $137.1 billion available cash, and it is considering different options including the distribution of a higher dividend and the implementation of stock repurchase program.
Laurence Balter, analysr at Oracle Investment Research estimated that Apple Inc. (NASDAQ:AAPL) could add approximately $40 billion to $42 billion to its cash balance this year. Balter believed that the company could generate $15 billion of the estimated cash in the United States.
Balter also estimated that Apple could boost its quarterly dividend to $3.31 per share and spend $10 billion in one-time payout. “There has been almost a $300 billion decline in value of this company.Any CEO at the helm of any U.S. or international company that sat at their desk idly while this happened would be shown the door,” he added.
Keith Goddard, president of Capital Advisors Inc predicted that Apple Inc. (NASDAQ:AAPL) would announce a dividend or shares buyback as early as April during its second quarter earnings report or by the end of this year. He also said, “I’m frankly puzzled myself as to why they seem so slow to make a decision on this.”