Apple set to raise dividend by 50pc to appease investors
Published 19/03/2013 | 05:00
APPLE could boost its dividend by more than half, according to analysts surveyed by Bloomberg.
This would provide investors hit by the company's recent share slump with one of the highest yields in the history of the US technology industry. Apple's share price has declined by 37pc since it peaked in September 2012. CEO Tim Cook has faced mounting pressure to pay out more of the $137.1bn in cash and investments that Apple is sitting on.
"The accumulation of cash has become excessive," says Brian White, an analyst at New York-based Topeka Capital Markets Inc. "It doesn't matter which bearish scenario you forecast, they're never going to need this much cash."
Given that many companies announce dividend changes once a year, speculation is growing as Apple approaches the anniversary of last year's announcement by Mr Cook that the company would reinstate a dividend.
This came after a 17-year hiatus on dividends introduced in 1995, a pattern set by founder Steve Jobs who sought to preserve capital.
But many investors have been seeking more.
Apple has said it is in active discussions over how to manage its cash and is considering buybacks or a higher dividend among other options. It launched a $10bn share buyback programme alongside its dividend announcement last year.
A separate Bloomberg projection predicts that the company may raise its current quarterly payout by 13pc to about $3 a share. That would give it one of the highest yields among its competitors, after Intel and Microsoft.
A quarterly $3 per share payout would mean a total annual gain of $1.6bn for Apple's top three institutional investors, BlackRock, Vanguard and FMR, who combined own about 133 million shares.
However, the six analysts surveyed estimate that Apple will probably lift its quarterly dividend to as much as $4.14 a share, for an annual payout of $15.7bn.
The resulting yield of 3.7pc would be higher than the yield offered by 86pc of the companies in the Standard & Poor's 500 Index paying dividends.
Apple's share price rose 1.8pc to $451.50 in New York.