Analyst on Apple: Don’t Expect a Special Dividend

There has been a lot of talk about Apple (NASDAQ:AAPL) possibly issuing a special dividend this month to please investors concerned about the higher taxes associated with the looming fiscal cliff. However, at least one analyst does not believe the iPhone maker will make such a move. Deutsche Bank’s Chris Whitmore wrote in a note to clients on Monday that even though there were arguments to be made in favor of a one-time cash outlay to Apple shareholders, the task actually had little chance of being completed.

Apple has plenty of cash on hand — currently estimated at $121 billion — and it has shown a recent willingness to share that treasure chest with shareholders. The company is also receiving a relatively low rate of return on its cash and marketable securities. “However, despite the wishes of many investors, the probability of a special Apple dividend appears low as we believe the company is more focused on building a track record of predictable dividend growth (vs. one time lump payment) and share buybacks,” Whitmore wrote, according to Fortune.

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“Although a special dividend would be a big short-term positive development, it appears unlikely at this point in time as special dividends do not tend to have a lasting benefit to shareholders. Irrespective of its near term dividend policy, we think Apple remains attractively valued.”

Whitmore also reiterated his buy rating on the stock and his $800 price target.

The tax rate on dividends is likely to rise from 15 percent to about 40 percent in January if the changes related to the fiscal cliff are implemented. In reaction, several companies, such as Costco Wholesale (NASDAQ:COST), have announced special dividends for shareholders, which will come this month and help the shareholders avoid the higher taxes. Meanwhile, Costco rival Wal-Mart Stores (NYSE:WMT) has moved its dividend payments normally made in January into December.

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