Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Apple Inc. (AAPL): How Much Returning Cash Really Matters: Research In Motion Ltd (BBRY), Google Inc (GOOG)

Apple has more than enough cash from operations to fund a small dividend increase:

3/31/2012 6/30/2012 9/30/2012 12/31/2012
Net Cash From Op Activities 31,531.00 41,720.00 50,856.00 23,426.00

Data Source:


If history could be used as guide, Microsoft would best illustrate why dividends do not matter in improving the share price of a company. Microsoft shares have remained range-bound after the dot-com crash. Yet when Microsoft began paying dividends in February, 2003, shares still remained range-bound. Fundamentally, the software giant found itself stuck in the PC market, unable to find its position in the mobile space to extend its growth.

For Apple Inc. (NASDAQ:AAPL), the situation is vastly different than that of Microsoft. Apple generates extraordinary profit margins. Investors are voting against Apple at this time because they anticipate competition from Android will erode these profits.

Source: @asymco

The short-term decline in Apple shares is frightening for investors who bought shares in the last year. Apple shares could be reverting to the mean as it gives back some of the extraordinary gains made over the last several years. A dividend increase rewards investors and encourages them to hold shares, rather than to speculate on them. The cash returned to investors in some form will benefit long-time shareholders.

For short-term speculators, Apple Inc. (NASDAQ:AAPL)’s valuation will likely be restrained by chronic worries of competition, no matter what innovations the company introduces to its iPhone or iPad. Apple needs to announce something bigger than that to appease speculators.

The article Apple: How Much Returning Cash Really Matters originally appeared on and is written by Chris Lau.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.