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 Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

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!