Apple: Is The Time Right For a Dividend Hike?

Last week, the anniversary of the reinstatement of Apple’s (NASDAQ:AAPL) dividend came and went with much speculation but little action. While many investors felt the moment was right for the world’s largest tech company to increase its cash payout, Apple apparently felt differently. True to form, the company is doing things on its own terms.

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The average estimate of six analysts polled by Bloomberg last week puts a probable dividend increase of 56 percent on the table, hiking the yield up to about 3.7 percent, or $4.14 per share. At that rate, Apple would boast a dividend higher than 86 percent of the companies on the S&P index.

The expectation that Apple will do something with its $137 billion cash-and-investment war chest is snowballing larger every day. Weighing in this week, Lawrence Haverty, a portfolio manager at Gamco Investors (NYSE:GBL) told Bloomberg’s “Surveillance” that the company could have an announcement before June 30…

“The pressure is just increasing because last week we had 700 stocks — an incredibly broad market — in the new high list in the New York Stock Exchange and here is Apple crashing into the new low list. Something is going to happen,” he said. “It just has to.”

Topeka Capital Markets analyst Brian White issued a note last week that laid out three steps that Apple could take to return to prosperity. The first one, unsurprisingly, is to increase the dividend and attract — or retain — true value investors.

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“Given that Appleā€™s recent shareholder meeting is out of the way and David Einhorn successfully made his case for a much larger distribution of cash, the timing is right for a bigger deployment of cash,” he wrote. “We continue to believe that Apple should increase its quarterly cash dividend payout to $3.75 to $5.00 per share (annual yield of 3.3% to 4.4%).”

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