Will Apple Inc. (AAPL) Pay a Special Dividend?

As we edge closer and closer to an impending fiscal cliff, the markets are doing a few peculiar things. You could have probably guessed that many investors have booked their gains before a potential rise in the capital gains tax, or are at least thinking about it. This pre-2013 profit-taking tactic has been speculated to be at least partially responsible for a selloff in shares of Apple Inc. (NASDAQ:AAPL), among other stocks that have seen their fortunes rise this year.

Apple Inc. (NASDAQ:AAPL)

A strategy that may be flying a bit under the radar, however, is making short-term bullish bets on companies that may announce a special dividend in time for Christmas. A special dividend is just what it sounds like: a one-time payment made to shareholders outside of the normal dividend schedule. In this case, a company could initiate such a move if it wanted to bolster the confidence of income investors, some of whom may be faced with a net 15%-20% hike in dividend taxes (depending on the tax bracket they fall in) when the calendar turns over.

An Apple “rental,” as it was described by JC O’Hara of Phoenix Partners Group on CNBC today (see technicals vs. fundamentals battle here), may be a good play, but it’s worth noting that nothing official has come out of Cupertino about a special dividend. Some other companies that have already graced their investors with this news include Las Vegas Sands Corp. (NYSE:LVS)Brown-Forman Corporation (NYSE:BF.B)Tyson Foods, Inc. (NYSE:TSN), and Sturm, Ruger & Company (NYSE:RGR) to name a few, though we haven’t seen any notable tech names.

That could all change soon, however, according to CNBC‘s “Fast Money” segment this afternoon. In the program, a team consisting of the usual analysts discusses how it might actually be “reckless” for Apple Inc. (NASDAQ:AAPL) to not pay a special dividend due to the mountain of cash it’s sitting on, which is currently over $120 billion high. According to Karen Finerman, we can reasonably assume that “a third of that is on-shore cash available to pay a dividend,” and “if there’s any company that should pay an enormous dividend, Apple is number one on the list.”

Larry McDonald, a strategist for the investment firm NewEdge and author of the critically acclaimed A Colossal Failure in Common Sense had this to say about the situation: ”I look to a screen of companies that have a lot of cash, companies that have heavy insider ownership and with massive stock outperformance versus the S&P over the past week, and Apple is on that list.”

Regarding the creeping fiscal cliff, McDonald said that he doesn’t see a potential deal shaking out until the week before Christmas, which in our opinion, would imply that companies thinking about paying special dividends would be under more pressure to do so. Apple Inc. (NASDAQ:AAPL) is no exception, but it remains to be seen exactly if it will fork over an extra payment to ease the qualms of income investors. While there have been rumors that Apple has a multi-billion dollar lifeline to Sharp in order to keep supply chains intact, this represents but a drop in the tech giant’s proverbial bucket of cash.

Do you think AAPL will – or even should – pay a special dividend to its shareholders? Let us know your thoughts in the comments section below.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!