Apple's Dividend

The speculation about what Apple (AAPL) will do with the $137 billion cash hoard on its balance sheet is mounting ahead of the company's earnings later this month. One analyst thinks Apple could up the ante by as much as $20 billion over the next three years. UBS analyst Steven Milunovich believes that Apple could raise its cash return to shareholders to at least $65 billion over the next three years, up from $45 billion. Doing so would not only alleviate some of the pressure Apple is facing from shareholders, such as David Einhorn, but would boost investor appetite for the stock as well.

"The market appears to be underestimating the potential dividend increase, and a significant return of cash could boost the stock price by 10%," Milunovich wrote in his note. He rates shares "buy" with a $560 price target. Apple CEO Tim Cook has previously mentioned that the technology giant is in "very, very active" discussions on what to do with its cash hoard. In March 2012, Apple announced a combination of dividends and buybacks worth $45 billion to be paid out over three years.

Source: The Street

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