Apple Expected to Announce $16bn Dividend Payment
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Apple could increase its dividend payout by more than 50 percent to $16 billion this year, according to analysts surveyed by Bloomberg. The technology company, which announced its first dividend a year ago this week, is expected to cave in to growing pressure from Wall Street and activist shareholders who are asking it to pay out a bigger piece of its $137 billion cash pile.
Apple could increase its dividend payout by more than 50 percent to $16 billion this year, according to analysts surveyed by Bloomberg. The technology company, which announced its first dividend a year ago this week, is expected to cave in to growing pressure from Wall Street and activist shareholders who are asking it to pay out a bigger piece of its $137 billion cash pile.
Apple is expected to lift is quarterly dividend by 56 percent to $4.14 a share, for an annual payout of $15.7 billion, according to analysts interviewed by Bloomberg.
The higher dividend would give the stock a yield of 3.7 percent and place it in the upper ranks of dividend paying companies within the S&P 500.
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Apple closed the year with $137 billion in liquidity – the highest cash stockpile of all U.S. companies.
But credit ratings company Moody’s said on Monday Apple’s cash hoard could hit $170 billion by the end of 2013, lifting its share of total corporate liquidity to 11 percent.
“Unless Apple changes its philosophy towards liquidity/shareholder returns by increasing its $10 billion annual common dividend, or if Apple increases its stock buyback program, we estimate Apple’s cash balances could increase by another $35 billion in 2013 and exceed $170 billion,” Moody’s said in a report.
According to Moody’s, Apple alone represented $103 billion, or 26 percent, of the total $396 billion increase in total corporate cash piles since 2009.
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Apple has been under pressure from Wall Street to boost its dividends and one particular shareholder, Greenlight Capital, has threatened to take legal action against the company unless it issued a new class of preferred stock to reward shareholders.
In February, Greenlight, which holds more than 1.3 million Apple shares, successfully prevented a controversial shareholder vote from taking place that would have prohibited the company from issuing new high-yielding preferred stock without shareholder approval.
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“The accumulation of cash has become excessive,” Brian White, an analyst at Topeka Capital Markets, told Bloomberg in an interview. “It doesn’t matter which bearish scenario you forecast, they’re never going to need this much cash.”
