Apple Inc. (AAPL): When Will It Boost Its Dividend? Soon.

The one-year anniversary of Apple Inc. (NASDAQ:AAPL)‘s dividend on March 19 came and passed with no announcement from Apple to boost its dividend. Leading up to the anniversary, there was a lot of speculation around what exactly the company could announce. Though the buzz has faded, it doesn’t mean Apple won’t announce a plan to return even more cash to shareholders. In fact, investors should rest assured — an announcement is basically inevitable.

Some background
Just over a year ago, Apple announced plans to initiate a dividend and share-repurchase program. The quarterly dividend amounted to $2.65 per share. At today’s share price, the dividend yields a 2.4% return to investors. Apple’s share-repurchase program meant repurchasing $10 billion in shares over a three-year period.

Even at the time of the announcement, the payout seemed conservative. But a year later, investor concern looms: Despite Apple Inc. (NASDAQ:AAPL)’s payouts, its massive cash hoard — now more than $137 billion — is still growing even larger. Investors want in on it.

David Einhorn of Greenlight Capital made headlines in February, when he proposed that Apple pay out some of its cash in the form of preferred stock.

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Apple Inc. (NASDAQ:AAPL) responded with an official statement, admitting that the company has found itself “in the fortunate position of continuing to generate large amounts of cash, including $23 billion in cash flow from operations in the last quarter alone.” The statement asserted, “Apple’s management team and Board of Directors have been in active discussions about returning additional cash to shareholders.”

Why Apple can pay out more cash
If it isn’t clear already, Apple has enough cash sitting around to pay out more to shareholders. In fact, Apple has $145 in cash on its balance sheet for every share.

“The only thing that Apple Inc. (NASDAQ:AAPL) can’t do is nothing,” Fellow Fool Evan Niu asserted. Apple’s returned only a “sliver of cash” so far.

Evan illustrates his point with this mind-boggling chart.


Source: SEC filings. Calendar quarters shown. Cash returned includes dividends and buybacks. Chart created by Evan Niu.

Apple Inc. (NASDAQ:AAPL) must inevitably return more cash to shareholders in the near future. CEO Tim Cook’s statements at the 2013 Goldman Sachs conference again reiterated management’s recognition of its enormous cash pile: “We do have some cash. … And it’s an incredible privilege for us to be in a position that we can seriously consider returning additional cash toward shareholders.”

Topeka Capital Markets analyst Brian White projects that Apple’s cash balance could reach $241 billion by the end of fiscal 2015 if the company doesn’t return more cash to shareholders than it already is.

Apple is a top-notch dividend stock
Though Apple may have fully qualified as a growth stock several years ago, it’s now a top-notch dividend stock. In fact, the stock’s qualities as an income investment are largely undervalued.