Morgan Stanley: Apple Is Probably Going To Jack Up Its Dividend

tim cook wide

Photo: Photo by Kevork Djansezian/Getty Images

Bad news for hedge funder David Einhorn: Apple is likely to jack its dividend, says Morgan Stanley analyst Katy Huberty.Huberty met with Apple’s CFO. After the meeting she wrote that Apple will “likely increase cash return to shareholders.” She writes:

Apple could return more cash to shareholders given its cash balance is $40B higher vs. March 2012. Our analysis suggests Apple can match the S&P IT sector’s average FCF payout of 68% if it returns $28B in FY13, implying a 6% total yield. High mix of international cash limited flexibility in the past but raising low-interest debt can help address this issue, in our view.

Apple’s currently has a 2.3 per cent dividend yield, so this would be a big bump.

Einhorn had a big presentation yesterday about why Apple shouldn’t just do a dividend bump. He thinks it wouldn’t help Apple’s PE.

He wants to see Apple do preferred shares that deliver a dividend in perpetuity. His plan would have a 4 per cent annual yield.

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.

Tagged In

apple sai-us