Apple special dividend coming? Makes sense, says Gene Munster

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Customers gather outside an Apple store before the release of iPhone 5 in Munich early September 21, 2012. REUTERS/Michael Dalder
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Trump’s tax plan has already rewarded millions of American workers now in line to receive cash bonuses and other financial perks, thanks to CEOs from the likes of AT&T (T), Visa (V) and Bank of America (BAC) all showing their appreciation for a 21% corporate tax rate instead of the previous 35%.

Next, Apple (AAPL) CEO Tim Cook, who helms the company with the world’s deepest pockets, may be among the more prominent executives queuing up to reward investors with a windfall in the form a one-time special dividend.

Ticker Security Last Change %Chg
AAPL Opens a New Window. APPLE INC. 174.33 -0.02 -0.01%

“It is the most logical use case for Apple’s cash,” said Gene Munster, managing partner of Loup Ventures, during an interview on FOX Business’ “Varney & Co.” from the Consumer Electronics Show in Las Vegas.

Apple, best known for iPhones, iPads and Macs, will have nearly $300 billion in cash to play with this quarter, according to investors. Thus far it has been conservative with its dividend, according to dividend watchers, despite a market value of nearly $900 billion. Currently, the annual payout is $2.52 per share with a yield of 1.47%, as tracked by Thomson Reuters.

Munster predicts Apple will repatriate as much as $220 billion allocated like this: “The majority will be share buybacks and probably the ongoing dividend, but it would make sense they’d give a special dividend,” he said while also noting an announcement will likely come in March when the tech giant historically has detailed capital allocation plans. UBS analyst Steven Milunovich also expects repatriation plans, closer to $250 billion, some of which may boost buybacks.

The company paid a total of $12.6 billion and $12 billion in dividends during 2017 and 2016, respectively, and expects to pay quarterly dividends of 63 cents per common share each quarter, subject to declaration by the board of directors, as stated in SEC filings.

When Cook took over as CEO from founder Steve Jobs in 2012, he revived the dividend which had been on ice since 1995. His goal was to reward current investors and attract new ones, he said at the time.

Apple shares have gained 3.2% this year.

Special one-time dividends are few and far between. Last year, just six S&P 500 companies gave payouts, as tracked by our partners at the WSJ Market Data Group. Cincinnati Financial Corp. (CINF), CME Group (CME), Duke Realty (DRE), Ford (F), Host Hotels & Resorts (HST) and PACCAR (PCAR) paid investors special dividends in 2017.

Ticker Security Last Change %Chg
CINF Opens a New Window. CINCINNATI FINANCIAL CORP. 73.21 -0.46 -0.62%
CME Opens a New Window. CME GROUP INC 152.63 +0.90 +0.59%
DRE Opens a New Window. DUKE REALTY 26.23 -0.25 -0.94%
F Opens a New Window. FORD MOTOR COMPANY 13.08 -0.07 -0.53%
HST Opens a New Window. HOST HOTELS & RESORTS INC 20.44 +0.05 +0.25%
PCAR Opens a New Window. PACCAR INC. 74.83 -0.03 -0.04%

Perhaps this year, in light of a lower corporate tax rate, that list will grow.

Apple did not immediately respond to FOX Business’ request for comment.

 

 

 

*News Searching By FOX NEWS*

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