CEO Tim Cook Hints At Apple Dividend

Investors received a positive signal from CEO Tim Cook yesterday that an Apple dividend could be coming in the near future.

 

Speaking at a Goldman Sachs technology conference yesterday, Cook stated that there are serious discussions taking place at the Board level over what to do with their massive cash holdings.

 

“It is being discussed more and in more detail.”

 

At the end of 2012, Apple held over $97 billion in cash and securities on their balance sheet. In addition, the company is now generating over $17 billion in cash flow each quarter.

 

The Apple dividend talks come as AAPL shares hit a new 52-week high of $509.46. Since the beginning of 2012, Apple stock has climbed over 25 percent.

 

Former CEO Steve Jobs always opposed instituting a new Apple dividend after watching the company falter in the early 1990’s partially as a result of maintaining their dividend payments.

 

Since Apple has not paid out a dividend since 1995, it’s difficult to say what investors could expect in a new Apple dividend. Assuming a very modest 20 – 25 percent dividend payout ratio on consensus 2013 EPS estimates would result in an annual dividend payment of $9.46 – 11.82. Of course Apple could afford to pay a much higher dividend, but even a conservative estimate results in a 2 percent dividend yield.

 

For now investors will have to content themselves with Apple as a shadow dividend stock and just enjoy their capital gains.

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