Would an Apple Dividend Hike Fend Off Einhorn?

February 11, 2013 by Douglas A. McIntyre

The latest speculation about Apple Inc.’s (NASDAQ: AAPL) financial plans is that it will raise its dividend. That may be a way to fend off activist investor David Einhorn, who wants the company to create more “shareholder value.”

According to CNBC:

“While trying to extract information from AAPL (Apple) management is like squeezing ‘water from a rock,’ we did speak with AAPL CFO (Peter Oppenheimer) this past Friday and found the conversation helpful,” wrote ISI analyst Brian Marshall in a note to clients Sunday. “We touched upon a variety of topics, including capital allocation framework.”

After speaking with Oppenheimer, ISI’s Marshall recommended back to the company in Sunday’s report that it increases its current 3-year allocation plan amount to $60 billion from $45 billion. His plan, which would use 50 percent of the firm’s annual free cash flow, puts two-thirds of the cash toward a dividend and the rest to buy back shares.

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