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Post by aaplsauce on Apr 21, 2022 21:13:04 GMT -8
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Post by clarus on Apr 22, 2022 3:15:24 GMT -8
Long time lurker, first time poster… moved to action by yesterday’s exhortation to post and contribute to community.
Here’s a question for the board - This next earnings period is also typically when Apple reviews their dividend policy and I was wondering if they might hike that more aggressively given the broader economic and political climate. They will continue to do buy backs for sure, but at what point does the inability of buy backs to sponge up cash flow lead to increased dividends. Tim promised many years ago that they want to be cash neutral and despite their best efforts with Gargantuan buybacks, that has not happened. Now they are facing a gusher of new revenue from a reinvigorated Macintosh and new product launches looming so it may be even less likely going forward.
Because of the wild swings in tech and Apple itself, Apple is a poor income investment for those that depend on predictable returns, so not for widows and orphans as it were, but surely a better balance is now achievable?
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chinacat
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AAPL Long since 2006
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Post by chinacat on Apr 22, 2022 6:01:39 GMT -8
Welcome, clarus. The non-traders among us have been wishing/hoping for larger bumps in the dividend for years now, ever since Apple began its ascent toward the top of the enterprise value heap. Alas, Tim and the Board seem committed to a slow but steady strategy, punctuated by the occasional stock split to keep the share price in a moderate range. It’s hard to complain about the resulting total returns in value, but an occasional extra pop in the dividend would please many of us. Meanwhile… Business Insider has A top FCC official accused Tim Cook of hypocrisy for talking up Apple's commitment to human rights while censoring apps in China. This another area where Tim has walked a fine line. My guess is that most Apple employees in China are satisfied with the trade-off. Forbes has Will Apple Stock Bounce Back Post Q2 Results?. I’d say “bounce back” is an exaggeration, as AAPL has traded in a fairly narrow range this year.
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4aapl
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Post by 4aapl on Apr 22, 2022 7:32:52 GMT -8
This next earnings period is also typically when Apple reviews their dividend policy and I was wondering if they might hike that more aggressively given the broader economic and political climate. They will continue to do buy backs for sure, but at what point does the inability of buy backs to sponge up cash flow lead to increased dividends. Tim promised many years ago that they want to be cash neutral and despite their best efforts with Gargantuan buybacks, that has not happened. Now they are facing a gusher of new revenue from a reinvigorated Macintosh and new product launches looming so it may be even less likely going forward. Like chinacat posted, I imagine Apple continuing their slow and steady growth of their dividend. It seems like their model is the dividend aristocrats, raising their dividend each year, and continuing to do that through good years and bad. To do that, they need to stay conservative even when they have the finances to be aggressive. Still, even if it wouldn't move the needle much, it would be fun to get a 20% boost sometime, instead of 6-8%. I have a story to go with that, but I'll try to keep it short. I was on the board of our local nursery school (a non-profit), and then president, leading out of the 2008 downturn. In this thankless job with short tenures due to kids cycling through the 2 year program, one of the things we had to deal with was compensation. So much of the balance sheet was based on students, and having a year where the classes weren't at capacity was tough, even with some money in the bank account. In the next year, with more students and more income, it came time for raises and bonuses. Especially given the recent volatility of the past, I choose to push keeping the raise small (ongoing costs), while giving a bit more as a "one time bonus". There were of course further complexities as there always are, since there were varying financial needs including one who didn't need the money and normally donated everything back. But the moral of the story is to keep finances in check during the good times so you don't get killed in the bad times. Apple has been fairly moderate on the dividend increases it seems, though personally I'm not very in tuned with how much other companies raise their dividends, particularly since not too many tech companies that one might consider competitors to Apple even have dividends. It's hard to compare the likes of CVX, XOM, CLX or PG to what Apple should do. But there are some, like MSFT, IBM and ORCL, tech companies that have done well over a longer period of time and have good consistent cash flow. We'll see. But I expect we'll see more of the same, a "moderate" increase in the dividend, though a variable bump in the buyback depending on how much Apple feels their cash is burning a hole in their pocket.
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Post by nwjade on Apr 22, 2022 8:02:22 GMT -8
This next earnings period is also typically when Apple reviews their dividend policy and I was wondering if they might hike that more aggressively given the broader economic and political climate. They will continue to do buy backs for sure, but at what point does the inability of buy backs to sponge up cash flow lead to increased dividends. Tim promised many years ago that they want to be cash neutral and despite their best efforts with Gargantuan buybacks, that has not happened. Now they are facing a gusher of new revenue from a reinvigorated Macintosh and new product launches looming so it may be even less likely going forward. Like chinacat posted, I imagine Apple continuing their slow and steady growth of their dividend. It seems like their model is the dividend aristocrats, raising their dividend each year, and continuing to do that through good years and bad. To do that, they need to stay conservative even when they have the finances to be aggressive. Still, even if it wouldn't move the needle much, it would be fun to get a 20% boost sometime, instead of 6-8%. I have a story to go with that, but I'll try to keep it short. I was on the board of our local nursery school (a non-profit), and then president, leading out of the 2008 downturn. In this thankless job with short tenures due to kids cycling through the 2 year program, one of the things we had to deal with was compensation. So much of the balance sheet was based on students, and having a year where the classes weren't at capacity was tough, even with some money in the bank account. In the next year, with more students and more income, it came time for raises and bonuses. Especially given the recent volatility of the past, I choose to push keeping the raise small (ongoing costs), while giving a bit more as a "one time bonus". There were of course further complexities as there always are, since there were varying financial needs including one who didn't need the money and normally donated everything back. But the moral of the story is to keep finances in check during the good times so you don't get killed in the bad times. Apple has been fairly moderate on the dividend increases it seems, though personally I'm not very in tuned with how much other companies raise their dividends, particularly since not too many tech companies that one might consider competitors to Apple even have dividends. It's hard to compare the likes of CVX, XOM, CLX or PG to what Apple should do. But there are some, like MSFT, IBM and ORCL, tech companies that have done well over a longer period of time and have good consistent cash flow. We'll see. But I expect we'll see more of the same, a "moderate" increase in the dividend, though a variable bump in the buyback depending on how much Apple feels their cash is burning a hole in their pocket. Speaking to the '20% boost sometime for fun' there is the consideration of doing a one time large increase to bring the divy back up from .53% to a rate that would bring in new investors interested in growth and income. (Especially in this rising rate environment when aapl is sometimes referred to as somewhat of a safe haven and bond proxy on the talk shows).
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4aapl
Moderator
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Post by 4aapl on Apr 22, 2022 8:26:59 GMT -8
Speaking to the '20% boost sometime for fun' there is the consideration of doing a one time large increase to bring the divy back up from .53% to a rate that would bring in new investors interested in growth and income. (Especially in this rising rate environment when aapl is sometimes referred to as somewhat of a safe haven and bond proxy on the talk shows). I like the idea, but I don't see it happening in a one time increase. It's like the difference between Tim and Elon. Elon would decide it and just go for it. Tim, and also reminiscent of Steve's love of free news while later in life being slightly more conservative on finances, would instead spread a 100% increase over 4 years, making it 25-30% when including normal increases, and then talk about it. "As part of a multiyear plan to increase shareholder value and bring Apple closer to net-neutral, Apple is increasing their dividend by 10%. In addition, Apple is increasing the dividend by a bonus amount of 20%, for a total of 30% this year. As in past years, Apple will continue to reevaluate the dividend on an annual basis" Boring? Kinda, especially in comparison to a large one time increase or one time special dividend. But I'd put odds on it, if Apple even does choose to aim for a higher payout over time, since an 8% dividend increase doesn't keep up with 25% annualized underlying appreciation (yes, where the real money is at).
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Post by firestorm on Apr 22, 2022 9:27:40 GMT -8
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Post by nwjade on Apr 22, 2022 9:32:33 GMT -8
Speaking to the '20% boost sometime for fun' there is the consideration of doing a one time large increase to bring the divy back up from .53% to a rate that would bring in new investors interested in growth and income. (Especially in this rising rate environment when aapl is sometimes referred to as somewhat of a safe haven and bond proxy on the talk shows). I like the idea, but I don't see it happening in a one time increase. It's like the difference between Tim and Elon. Elon would decide it and just go for it. Tim, and also reminiscent of Steve's love of free news while later in life being slightly more conservative on finances, would instead spread a 100% increase over 4 years, making it 25-30% when including normal increases, and then talk about it. "As part of a multiyear plan to increase shareholder value and bring Apple closer to net-neutral, Apple is increasing their dividend by 10%. In addition, Apple is increasing the dividend by a bonus amount of 20%, for a total of 30% this year. As in past years, Apple will continue to reevaluate the dividend on an annual basis" Boring? Kinda, especially in comparison to a large one time increase or one time special dividend. But I'd put odds on it, if Apple even does choose to aim for a higher payout over time, since an 8% dividend increase doesn't keep up with 25% annualized underlying appreciation (yes, where the real money is at). What you're saying fits with what I was thinking they should consider doing for a large one time increase. If it becomes part of new more aggressive multi year review plan all the better.
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Post by kpas1 on Apr 22, 2022 9:34:18 GMT -8
Looking to sell the 165-170 strangle for next week's post-earnings expiration. From today's price of 164 that represents a modest bump up. This is covered by ITM long legs (on both the call and put side), and hedged in various ways to buffer against a big move either way. Hoping to thread the rather wide needle in that 165-170 range so the short legs expire worthless. Moderate, managed risk for a big potential reward. IV is way up, not only for AAPL but also helped by the market downturn today.
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Post by duckpins on Apr 22, 2022 11:06:28 GMT -8
Today is one of the worst days in history as far as point loss is concerned for all 3 major indexes. If the selling accelerates at the close, could be top ten if DOW drop is 1032. The Nasdaq has to get to 382 down to crack the top 20. At 110 down the S&P is already top 15. Systematic and continual selling for two days. Looks like October in April. Any stock that misses on EPS is going to loose a quarter to half its value. .
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Post by firestorm on Apr 22, 2022 11:52:46 GMT -8
This kind of day is what I've been expecting, and it's ugly all over. There are just too many issues on the world stage right now for stocks to keep ascending.
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Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,335
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Post by Dave on Apr 22, 2022 11:57:19 GMT -8
I like the idea, but I don't see it happening in a one time increase. It's like the difference between Tim and Elon. Elon would decide it and just go for it. Tim, and also reminiscent of Steve's love of free news while later in life being slightly more conservative on finances, would instead spread a 100% increase over 4 years, making it 25-30% when including normal increases, and then talk about it. "As part of a multiyear plan to increase shareholder value and bring Apple closer to net-neutral, Apple is increasing their dividend by 10%. In addition, Apple is increasing the dividend by a bonus amount of 20%, for a total of 30% this year. As in past years, Apple will continue to reevaluate the dividend on an annual basis" Boring? Kinda, especially in comparison to a large one time increase or one time special dividend. But I'd put odds on it, if Apple even does choose to aim for a higher payout over time, since an 8% dividend increase doesn't keep up with 25% annualized underlying appreciation (yes, where the real money is at). What you're saying fits with what I was thinking they should consider doing for a large one time increase. If it becomes part of new more aggressive multi year review plan all the better. Maybe we should keep in mind that Tim is a “supply side guy” that is concerned with keeping the cost down, as long as he is provided the results that are needed. When one looks at paying a dividend as an expense, then he may want to keep it as low as possible, as long as he gets the results that are acceptable of share ownership. Why pay out more than is needed. A dividend increase may not be a good sign, just as a reduction may not be a good sign either. Just a thought.
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Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,335
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Post by Dave on Apr 22, 2022 12:06:05 GMT -8
This kind of day is what I've been expecting, and it's ugly all over. There are just too many issues on the world stage right now for stocks to keep ascending. Yes, and it can be painful to let go of what has been so productive for so long. But it is what it is. Reality is a bitch.
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Post by eastbaybob on Apr 22, 2022 12:31:48 GMT -8
I am fine with whatever Tim and Luca decide about dividends and buybacks. As a very long term holder and someone who has been retired for 12 years, I would love to see a significant boost in the dividend. I understand that buybacks increases EPS and the tax advantage, etc. I I have made huge gains with Apple and especially over the last few years. My question is that the other big tech companies, Alphabet, Microsoft, Meta, Netflix until the shares collapsed have also made huge gains in the same time period as when Apple started the buybacks. As far as I know, they may do some buybacks but compared to Apple they are just buying a fraction of what Apple has bought back. If these large tech companies have pretty much gained the same percentage in share price then what is the point of apple spending endless billions on buybacks rather than just returning the cash as dividends. My situation is that I don't sell shares, I add to my share holdings by drppingi IRA dividends and I spend the dividends that are not in my IRA account
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JDSoCal
Member
Aspiring oligarch
Posts: 4,241
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Post by JDSoCal on Apr 22, 2022 12:33:48 GMT -8
This is an existential problem, and our government needs to step in to defend our companies abroad from these shakedowns. The Biden admin could nip this shit in the bud if it wanted to. But Apple is running out of friends...hence my lobbying comments yesterday. This is a real problem, people. This kind of day is what I've been expecting, and it's ugly all over. There are just too many issues on the world stage right now for stocks to keep ascending. The worst part being, any time the market shows some green shoots, the narcissistic big mouths at the Fed just have to chime in. Powell never saw a camera he didn't like. Greenspan and Bernake knew that you don't overexpose yourself, leave a little mystery, and people will listen more. But Powell and Bullard are giving interviews and speeches every other day. The only good news being, the MMT advocates are suddenly as quiet as churchmice.
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Post by CdnPhoto on Apr 22, 2022 12:48:20 GMT -8
To be honest, I'm all for adding USB-C to the iPhones. I was hoping that the iPhone 13 lineup would have had USB-C. Not a fan of being forced to do so though. Maybe Apple has one in the works, and will release it shortly (iPhone 14?) to quieten down the demands and show that they "gave in" a bit.
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ono
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posted
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Post by ono on Apr 22, 2022 14:18:30 GMT -8
I am fine with whatever Tim and Luca decide about dividends and buybacks. As a very long term holder and someone who has been retired for 12 years, I would love to see a significant boost in the dividend. I understand that buybacks increases EPS and the tax advantage, etc. I I have made huge gains with Apple and especially over the last few years. My question is that the other big tech companies, Alphabet, Microsoft, Meta, Netflix until the shares collapsed have also made huge gains in the same time period as when Apple started the buybacks. As far as I know, they may do some buybacks but compared to Apple they are just buying a fraction of what Apple has bought back. If these large tech companies have pretty much gained the same percentage in share price then what is the point of apple spending endless billions on buybacks rather than just returning the cash as dividends. My situation is that I don't sell shares, I add to my share holdings by drppingi IRA dividends and I spend the dividends that are not in my IRA account In the past - see 2019, '20, '21 - I've read the modest increase in dividends as a "tell" that Apple felt the share price was still significantly undervalued and so buybacks were a superior method to return value to shareholders (and employees, who accrue the dividend on their RSUs, but it's not paid until the RSU's vest). I can always - and have - sold shares for income, with taxes at long-term capital gain rates. I do enjoy the dividend, yet I think Luca and the board have served shareholders well by balancing the bet on the share price growth (EPS) and dividend growth. Share CAGR has been impressive vs. dividends (even if they had been 2x rate which may have supported a bit higher share price, I understand).
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ono
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posted
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Post by ono on Apr 22, 2022 14:41:27 GMT -8
P/E ratios: “The market loves movies and the internet and who doesn’t. It’s just that movies and the internet don’t make a great business.” From “Movies and the Internet” posted Thursday on Asymco.com:
Almost a year ago, on March 1st, 2021, I tweeted a snapshot of the “FAANG” P/E ratios. They were: ◦ Netflix: 88.63 ◦ Amazon: 73.94 ◦ Microsoft: 34.65 ◦ Google: 34.75 ◦ Apple: 32.89 ◦ Facebook: 25.53
Today same companies have the following ratios: ◦ Netflix: 19.34 ◦ Amazon: 46.08 ◦ Microsoft: 30.17 ◦ Google: 22.35 ◦ Apple: 27.79 ◦ Facebook: 13.67
What a difference 13 months makes. Microsoft and Apple saw modest falls 13% to 16%. Amazon, Google and Facebook saw large falls in their ratios: 38%, 36% and 48%. Facebook (now renamed pitifully as “Meta”) in particular saw its valuation collapse by half!..
But the star of the show, the real blockbuster, is Netflix. It fell from P/E of 88 to P/E of 19. Even six months ago the P/E was close to 70. What happened?…
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ono
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posted
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Post by ono on Apr 22, 2022 15:02:53 GMT -8
Jan 26, so dated:
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4aapl
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Post by 4aapl on Apr 22, 2022 15:35:04 GMT -8
But the star of the show, the real blockbuster, is Netflix. It fell from P/E of 88 to P/E of 19. Even six months ago the P/E was close to 70. What happened?… It's interesting to me that their 200,000 subscriber loss, by itself and when taking into account the 700,000 part of the loss due to dropping Russia, isn't too bad. It's when taking into account that analysts were expecting a 2M gain in subscribers. And Netflix saying they expect a loss of subscribers next quarter too, of I believe 2M. Apple has been down that path before. The double whammy of lower than expected results, and lower than expected outlook, really gets a company. Apple did this is September of 2000, as one of the first to fall off the dot com cliff. But it happened more recently too, when analyst iPhone expectations rose too much, and then they didn't materialize. I like to think we are still early enough in the economy that there will still be winners, though results are showing that there are starting to be some companies that aren't holding up. We'll see what Apple announces. The somewhat risky bet is to purchase something if AAPL makes it much closer to the recent 145/150 lows. The safer choice is to hold out until post earnings, both to get the results and expectations, but also see how the market reacts. That's IMO the bigger unknown these days. (EDIT: either way, another risk is just taking on too much risk or leverage here, as we are approaching at least a slow down of the economy, if not a recession. But that also has a timing aspect to it, of how soon, and how bad. My interpretation, especially when taking into account jobs, is that the economy is rocking pretty well right now. And so the trade off is how long there is until it won't be, vs how far forward looking the market is and how much it gets worried/scared about forward looking changes. That fits in with Powell foreshadowing what is going to be done, and like JD said the messaging seems to be pushed strongly right now. It's the right thing to do as far as reeling in inflation quicker than interest rates go up while jobs are highly available. It's just not the best for those hoping for stocks to continue their bullish run. This time really is different....at least a little bit.)
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Post by clarus on Apr 23, 2022 0:12:23 GMT -8
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Ted
fire starter
Posts: 892
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Post by Ted on Apr 24, 2022 11:28:30 GMT -8
I am fine with whatever Tim and Luca decide about dividends and buybacks. As a very long term holder and someone who has been retired for 12 years, I would love to see a significant boost in the dividend. I understand that buybacks increases EPS and the tax advantage, etc. I I have made huge gains with Apple and especially over the last few years. My question is that the other big tech companies, Alphabet, Microsoft, Meta, Netflix until the shares collapsed have also made huge gains in the same time period as when Apple started the buybacks. As far as I know, they may do some buybacks but compared to Apple they are just buying a fraction of what Apple has bought back. If these large tech companies have pretty much gained the same percentage in share price then what is the point of apple spending endless billions on buybacks rather than just returning the cash as dividends. My situation is that I don't sell shares, I add to my share holdings by drppingi IRA dividends and I spend the dividends that are not in my IRA account Hey Bob. I'd say that, while we can't know what would have happened to AAPL without the buybacks, we know the stock was a laggard relative to its peers for years before the backpacks started. Poor, beleaguered, low-PE Apple, despite inventing the most amazing device ever, was being priced only on its volatile hardware sales and gross margins. Apple management may have (probably) jump started the share price appreciation by throwing its boodles of profits at buybacks in numbers never before seen. That may have gotten the street's attention and finally enabled AAPL to keep up with and exceed some of its rivals' performance over the last few years. It got the Oracle of Omaha's attention...
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