There are many theories circulating about what shares of Apple Inc. (NASDAQ:AAPL) will do next, but one analyst was on CNBC earlier today discussing–in his opinion–why investors should still be bullish. Topeka Capital Markets’ Brian White, who is widely known for his Apple price target once in excess of $1,000, has lowered his outlook to $888. Still, this figure represents a 95% upside from current levels. Let’s get into the details of why White still holds this optimistic sentiment.
On Apple Inc. (NASDAQ:AAPL)’s investment outlook at the moment, White called the latest sell-off a “slippery slope,” adding that “it’s the outlook that people are concerned with.” The analyst also mentioned the following:
“These guys have the best product portfolio, and that has not changed. There’s very exciting things on the horizon [...] Apple TV, China Mobile. You know what they need to do is tap into this cash balance in a major way. So, a dividend, that’s much higher than we currently have. And we’ve said $3.75 to $5.00 per quarter versus $2.65. And a $10 billion buyback over three years, why don’t we do a something $100 billion over five years?”
At the end of the first quarter, Apple Inc. (NASDAQ:AAPL) shared that it now has $137 billion in cash, though our analysis shows that just a fraction of this hoard is available in in cash, cash equivalents, and short-term marketable securities. Still, the company has the capacity to boost its dividend if it so desires.
At a PEG near 0.5 and a forward P/E close to 9.0x, it’s clear that value-investors are attracted to this stock, but White discusses how a “sustainable dividend” increase would benefit the company by “expanding its investor base.” In his own words, White says that “distributing more cash” would obviously help, and it makes sense. Logically speaking, a higher yield would pull more income-seeking investors into Apple Inc. (NASDAQ:AAPL).
With a projected dividend yield near 2.1%, Apple offers a significantly smaller payout than other tech mega-caps like Intel Corporation (NASDAQ:INTC) and Microsoft Corporation (NASDAQ:MSFT), who yield 4.2% and 3.3% respectively.
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Disclosure: I have no positions in any of the stocks mentioned in this article