Mr. Cook, Increase This Dividend

It seems like just yesterday (Feb. 27, to be exact) that Apple (NASDAQ:AAPL) CEO Tim Cook disappointed at least some of us by announcing … well, pretty much nothing at Apple’s annual shareholder meeting.

It’s hard to believe a company that’s lost more than $300 billion in value in six months, which sits on over $137 billion in cash and investments and is fighting back a movement by Greenlight Capital’s David Einhorn to issue high-yielding preferred stock, could be spending its days wondering what to do to reward shareholders for hanging in.

Here’s a hint — increase the dividend!

And according to Bloomberg analysts, that’s what might occur as Apple approaches the anniversary of last year’s announcement to reinstate its dividend after a 17-year break imposed by Steve Jobs. Analysts surveyed by Bloomberg anticipate a rise from the current $2.65 per share (quarterly) to between $3.31 to $5.30 per share, with the average estimate from six analysts coming in at $4.14 per share, or a 56% increase.

And really, it’s not a stretch. Apple has the money both now and in the future to make it happen based on its cash balances, free cash flow, and even borrowing abilities:

  • Cash and investments total $137 billion, with roughly $94 billion held overseas.
  • Fiscal 2012 free cash flow totaled $42.6 billion, a 28% increase over 2011 according to Bloomberg.

How much will a $16-plus-per-share annual dividend cost Apple? About $15.7 billion a year. Truthfully, if Apple decided to use its pristine balance sheet and just borrow the money at what would have to be extremely friendly rates, they could afford this kind of dividend payout — and much higher — for the foreseeable future.

Here’s another piece of good news: At $16 a share, Apple’s dividend yield would rise to just over 3.5%, not quite as good as Intel (NASDAQ:INTC) at over 4%, but higher than Microsoft’s (NASDAQ:MSFT) 3.25%.

But let’s be candid: Cook hasn’t made too many new friends since taking over from Jobs, and his performance has him sinking in the eyes of those who follow CEOs. For what its worth, I feel the man’s pain — after all, he didn’t bid the stock up to absurd heights — but he appears as aloof and uncaring as his mentor when it comes to shareholder relations.

And our “relations” are perhaps colored just a bit by inaction: If the stock had never seen $700 a share, but perhaps only rose to $550 or so, most of us would view this as an outstanding stock. Despite its slowing revenues and the presence of serious competition from Samsung (PINK:SSNLF) in the smartphone space, and Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN) in the tablet wars, and everyone else making noise around them, this would be one great play — strong earnings even in the face of slower growth, massive cash flow, and dividend potential from here to the moon.

InvestorPlace‘s Jeff Reeves lamented recently that if you bought into the mania too late you are now stuck with a decision: stay in for the long term dividend and (moderate) rebound, or get out. I didn’t hear what I wanted from Cook at the shareholder meeting — but since I bought for the long term, I’m anxiously hoping the boys at Bloomberg are right, and my patience is rewarded.

Please, Tim, do right by the little guy just once!

Marc Bastow is an Assistant Editor at As of this writing he is long MSFT and AAPL.

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