It's time to stop lying to ourselves about Apple (AAPL). Apple is an old company pretending to be hip. The company is a corporate version of Madonna with only one more trick up its sleeve.
Apple should shock the world by kicking off more in dividends than any company in the history.
As my c0-host Matt Nesto and I discuss in the attached video, obviously there is no "next big thing" in Apple's product pipeline. There are a bunch slight variations on very cool existing products. Apple's fiscal fourth quarter was stunning on every metric except those that define what it means to be a "growth" company. Margins are shrinking, profits are falling, and so is market share on key products. Apple needs to acknowledge that truth and shock the world one last time by becoming the highest yielding tech company in the history of the world.
Apple isn't a one-stock hedge fund in the business of trading its own shares. It's an aging company with gargantuan cashflows. Whether or not Apple has made money buying shares of Apple is irrelevant. Apple spent nearly $23 billion buying its own shares in the year ending September 28th. The stock is down more than 10% in that time and earnings per share have fallen. Clearly the 2.3% dividend Apple currently offers is doing little to help the st0ck either.
Investors have a belly full of tablets but remain "yield starved." Apple should feed the need. Crank the company dividend to 8% and stop buying back shares (to Carl Icahn's chagrin). Follow hedge fun king David Einhorn's plan and issue iPrefs. Apple will still have money left over to tweak the iPhone and the iPad, and Cook can stop getting hassled about what to do with all that cash with one creative act. An 8% yield is genius in simplicity and innovation. Call it the financial version of the iPod.
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