Based on a recent report published by Reuters, Apple Inc will decide the future of its $98 billion cash pile during a meeting on Monday. Analysts think the IT company plans to pay its first dividend since 1995. This move could help Apple attract a new class of investors who seek a dividend yield.
Given that its shares have grown up to $600 on Friday, Apple decided to hold a conference call on Monday to determine the future of its budget. Brian Marshall, an ISI Group analyst claims that the iPad manufacturer holds cash and securities that amount to $98 billion; therefore, it is important to determine whether they want to return money to shareholders or invest them in another way.
Wall Street analysts, however, claim the IT giant will most likely opt to pay a dividend given the recent declarations made by CEO Tim Cook. Cook told reporters in a recent interview that he had been considering investors’ demand to return some of the cash to shareholders with the help of a dividend. In his opinion, the money that Apple holds at present is more than enough to run the company.
According to the data provided by Thompson Reuters, the last time Apple decided to pay a dividend was in 1995. The decision they took back then influenced the company in a negative way because Apple registered a net loss of $816 million in the following year. Shaw Wu, analyst with Sterne Agee thinks the current dividend will not bring any immediate advantages to the iPad and iPhone maker.
Nevertheless, there are but two methods Apple could use if the firm decides to give money back to its shareholders. First of all, they could resort to a dividend which is the safest choice in most analysts’ opinion or, second of all, they could adopt an annual payment. There is also the option of the share buyback, but it would be easier for Apple to opt for a dividend.
It remains to be seen whether Cooks’ decision will turn out fruitful for the company or not. Meanwhile, the announcement that Apple has made and the success that the new iPad seems to have on the market, have propelled the stock to above $600 a share.
