The latest surge in Apple shares that’s pushed them above $500 is not because of speculation about its next revolutionary product, but rather the possibility that the preeminent technology growth stock will declare a dividend, or even split its shares, analysts and traders said.
An iPad3 with a higher resolution screen and other technical upgrades from its predecessor is expected to be released in early March. But most buyers are focusing in on the company’s Feb. 23 shareholder meeting in Cupertino, California. They’ve pushed the stock up nearly 19 percent in 1 month.
“We believe the topic around uses of cash including paying a dividend will likely be discussed” at the meeting, wrote Shaw Wu, a Sterne Agee analyst with a $550 price target on the shares, in a note last week. “We believe a yield in the 2 percent to 3 percent range would be very attractive for shareholders, including employees.”
A dividend yield of 2.5 percent would equate to an annual dividend of $12.50 a share, or $11.65 billion. Many investors feel that is nothing for a company with an unprecedented $98 billion cash hoard. Plus, its estimated by Wu that Apple generated $45 billion in cash over just the last four quarters.Page 1 of 4 | Next Page