What should Apple do with all of its cash? At Apple’s annual shareholding meeting, CEO Tim Cook fielded questions about a lawsuit filed by activist investor David Einhorn challenging the company’s voting procedures on ballot initiatives before investors. The billionaire investor’s larger point: Apple should share more of its $137 billion-plus cash hoard with investors, perhaps through a preferred shared with a generous fixed dividend.
Cook says the board is mulling over options, but no word yet on what Apple might do. Covestor Investment Model Manager Eric Steiman thinks Apple should consider one of the following paths: a one-time $89 dividend; a double dividend; a one-time share buyback; or ongoing share buybacks.
“They have too much cash, and are making too much on a quarterly basis to not repay their shareholders,” he told MacNewsWorld. In general, investors reward companies a premium P/E multiple if they use their cash in the best interests of their shareholders, according to Steiman. That’s a fact that Apple should note, he told MacNewsWorld, considering that its growth is slowing.
- Xavier Brenner has covered global market, business and economic trends for Interactive Brokers Asset Management since 2013. An experienced financial journalist, Brenner offers analysis and insights on the stories that matter to the discerning investor.