Apple can't raise dividends here is why - good article in Forbes
It would be hard not to know that Apple’s shares have gotten crushed over the past four months ($702 on September 19) and since the start of the year ($532 on December 31) to $505. While the dividend yield is now 2.1% and there are a number of articles about how much it could (or should be) raised one needs to take a look at US based cash and investments and US generated cash to determine how much Apple may raise its dividend. Payout ratios are almost irrelevant if you don’t know how much US cash there is.
First, I believe that Apple won’t rush into any decisions (remember how long it has taken management to re-start a dividend and share buyback program). I believe they are on a path to increase it over time vs. making a big increase.
Second, since dividends and stock buybacks can only be done with US based cash one needs to understand what those numbers are. Below is a table with Apple’s 2011 and 2012 year end reported balance sheets and my projection for September 2013.
From the 10K’s you can determine how much cash is US based which was $27.3 billion in 2011 and $38.7 billion in 2012 or an increase of $11.4 billion. For 2013 I estimate that US based cash will increase by $11.5 billion (about flat with the previous year) and that its dividend payments ($10.1 billion) and stock buybacks ($3.3 billion) will use all the US cash generated in 2013.
Therefore for Apple to increase its dividend it would have to start using some of the $36.8 billion remaining in the US ($38.7 billion on September 2011 minus the $1.9 billion needed for 2013’s dividends and buybacks). Or it could borrow money which I don’t see the company doing.
IF can borrow at 2%, why not borrow $1 Trillion and buy back the whole company at $1200 per share?
Debt Service payments would only be $20 billion per year in interest and all tax deductible. Can even do it at 4% and still would be less Debt Interest Payments per year than Apple's Cashflow of about $60 billion.