With AAPL stock in decline, investors are rioting to get a piece of Apple’s $137.1 billion cash horde. Greenlight Capital’s David Einhorn, of course, has been making waves with his lawsuit against Apple and his proposal that Apple issue an ‘iPref’ preferred dividend to investors; now, Morgan Stanley Katy Huberty has come out of a meeting with Apple CFO Peter Oppenheimer, apparently convinced that Apple will more than double its existing dividend to investors to 6%.
In a note to clients today, Huberty said:
“Our analysis,” she writes, “suggests Apple can match the S&P IT sector’s average FCF [free cash flow] payout of 68% if it returns $28B in FY13, implying a 6% total yield. High mix of international cash limited flexibility in the past but raising low-interest debt can help address this issue, in our view.”
I’m not a financial expert, but it appears that what she is saying here is that while Apple has $137.1 Billion offshores, it can’t easily bring that money to the United States to pay investors without being heavily taxed on it. Consequently, she believes that if Apple were to raise the dividends it pays to investors, it would do so by borrowing money at a low interest domestically. Which is an interesting situation Apple might find itself in: having to borrow money when it’s one of the wealthiest companies on Earth.