President Donald Trump has butted heads with Apple Inc. (ticker: AAPL) in the past over the company’s stance on user privacy and its reliance on Chinese labor. But regardless of their personal feelings toward the president, Apple investors could be major beneficiaries from Trump’s proposed corporate tax repatriation holiday.
Pacific Crest analyst Andy Hargreaves says Apple could use repatriated cash to double its dividend in the years ahead. Apple has $227 billion in cash held overseas, more than any other American company. At Trump’s proposed repatriation rate of only 10 percent, Apple could free up more than $200 billion of that cash to return to shareholders.
“In a repatriation scenario, we believe the company could comfortably double the per-share payment to $4.56 while still leaving ample capacity for continued buybacks or strategic acquisitions,” Hargreaves says.
Apple expects to pay less than $13 billion in total dividends to shareholders in 2017.
If Apple chooses to double its payout, the stock’s yield could exceed 3.2 percent. Pacific Crest is projecting iPhone unit sales growth to reaccelerate to 5 percent in fiscal 2017 and 7 percent in fiscal 2018. In addition to those solid growth numbers, a 3.2 percent yield would make Apple one of the best dividend stocks in the world.
[See: 7 Things That Happened When Donald Trump Met With Tech Leaders.]
Earlier this year, Apple CEO Tim Cook told investors Trump’s repatriation holiday would be “very good for the country and good for Apple.”
Trump’s 10 percent proposed holiday tax rate is significantly lower than the 35 percent rate U.S. companies would pay to repatriate cash today. The last time the government provided a repatriation holiday for U.S. companies was back in 2004 when corporations were allowed to pay a one-time tax rate of 5.25 percent.
[Read: Apple Desperately Needs a New Brilliant Product.]
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Apple Inc. (AAPL) Could Become the Next Great Dividend Stock originally appeared on usnews.com
