Scalper1 News
During Apple ‘s ( AAPL ) annual meeting last month, CEO Tim Cook said the company was committed to raising its dividend annually. The question of how much that raise will be won’t be answered until next month when Apple reports its March-quarter financial results. Piper Jaffray analyst Gene Munster on Thursday predicted that Apple will raise its dividend by 5% to 10%. “We believe that prior changes in capital return policy are good indicators for what to expect this April,” Munster said in a report. In April 2015, Apple raised its dividend by 11% to 52 cents a share. And in April 2014, Apple raised its dividend by 8%. Apple also is likely to hike its stock buyback plan significantly, he said. “We expect Apple to add $30 billion-$50 billion to its share repurchase program, based on the past two years of the share repurchase program,” Munster said. “This would generate an incremental 5% EPS growth, excluding revenue in each of the next two years.” Last April, Apple increased its buyback program by $50 billion to a $140 billion total. In January, Apple had $30 billion left on its current repurchase authorization, Munster said. “Our model reflects a share count reduction of 3% in calendar 2016, compared to an actual reduction of 5% in 2015,” he said. “We believe the updated buyback would suggest our share count reduction expectations are conservative.” It took Apple 3-1/2 years to repurchase $110 billion in stock of the authorized $140 billion program, he said. “Every 1% in share-count reduction adds about 9 cents to annual EPS, or about 1%,” Munster said. “Assuming a $110 average stock price, that 1% share count reduction would cost about $6.1 billion. In other words, if Apple increases the buyback by $40 billion, and has $20 billion-$25 billion left on the existing buyback, this would increase EPS by 10% if they completed the entire buyback in a year, excluding revenue growth. Most likely, the buyback will happen over a two-year period, generating about 5% EPS growth in each of the next two years.” Scalper1 News
Scalper1 News