2013’s Best Dividend Stock: Apple Inc. (AAPL)?

Apple’s fortunate cash problem
Though Apple’s cash hoard is often quoted as $137 billion, the net figure of liquid cash and assets that aren’t needed to run the business is actually closer to $101 billion. Either way, Apple does have a fortunate cash problem.

Less than a year ago, Apple announced a $45 billion plan to return cash to shareholders and repurchase shares. Already Apple has executed $10 billion of this plan — but it’s not enough. This cash hoard is growing faster than Apple is spending it. In the company’s first quarter alone, Apple generated $23 billion in cash from operations.

Now the question isn’t whether or not Apple is going to return more cash to shareholders, but how much more cash will Apple return to shareholders, and in what manner? On Feb. 7, Apple responded to David Einhorn’s proposal for a 4% yielding preferred share that would trade at approximately $32 per share. In the press release, Apple stated it would “thoroughly evaluate Greenlight Capital’s current proposal to issue some form of preferred stock” and that the management team and board of directors “have been in active discussions about returning additional cash to shareholders.”

Apple’s superior ability to throw off tons of cash, its meaningful dividend yield, its very conservative payout ratio, and a fortunate cash problem make Apple a great candidate for 2013’s best dividend stock. Better yet, at just 10.4 times earnings, Apple is a bargain, making it a great potential fit for any Fool’s dividend portfolio.

The article 2013’s Best Dividend Stock: Apple? originally appeared on Fool.com and is written by Daniel Sparks.

Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Apple, Coca-Cola, Goldman (NYSE:GS) Sachs, Google, and Procter & Gamble. The Motley Fool owns shares of Apple, Google, and Microsoft.

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