Will Apple’s Cash Gifts Lure Investors?
Apple (NASDAQ:AAPL) bull Gene Munster has suggested the company announce an increased dividend in the coming year in order to provide a catalyst for the stock. It’s one of three suggestions from the Piper Jaffray analyst, who also recommends a television to be introduced next fall and a new iPhone partnership with China Mobile (NYSE:CHL).
What Can Apple Do?
“We feel good that these catalysts are going to come through,” Munster said on CNBC while acknowledging investor concerns about falling margins and a possible capital gains tax hike with the coming of the fiscal cliff. According to Barron’s, Apple’s dividend payout ratio is “20 percent of projected earnings,” far below that of rivals Microsoft (NASDAQ:MSFT) at 32 percent and Cisco (NASDAQ:CSCO) at 29 percent. Its projected yield of 2 percent also falls below Microsoft’s 3.3 percent and Cisco’s 2.8 percent — making a case for a higher rate.
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Apple certainly has the cash for it, with estimated holdings at $120 billion and growing.
CHEAT SHEET Analysis: Catalysts for a Stock’s Movement
One of the core components of our CHEAT SHEET investing framework focuses on the factors that could affect a company’s stock. According to Munster, a higher dividend will help Apple, whose stock has been so unstable lately. Apple has lost almost 28 percent of its value since reaching a record high in September on the buzz of the launch of the iPhone 5. But according to Munster, the buying opportunity has never been better.
“That’s the opportunity in something like Apple,” he said. “There’s a lot of analysis done on this, and in order to make real money in it, you’ve got to step in when everybody else is not stepping in. We believe that this is one of those opportunities.”
Don’t Miss: Analyst: China Mobile Needs an Apple Shot.