As I write this, Apple (NASDAQ:AAPL) is the largest company by market cap to not pay a dividend.
With its cash generation capacity, does it make sense for Apple to continue to avoid paying dividends? The company has $24.7 billion in cash and short-term investments listed on its balance sheet. At some point, investors should begin pushing for Apple to follow examples of companies like Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC) and pay some portion on this cash flow back to investors. At the very minimum, it should re-purchase enough shares to limit dilution. Chad Brand is of a similar mind, calling for Apple to repurchase shares.
At a 30% cash flow payout, Apple shares would provide a yield of just over 2%. This would provide Apple with plenty of cash flow to continue its current rate of growth while enhancing the rewards to Apple shareholders. Apple had $5.8 billion in positive cash flow from operating activities last quarter, and could produce $14 billion for the year. If this cash cannot be invested by the company to compound returns at a reasonable rate, it should be returned to shareholders in some form or another.
Disclosure: I currently hold shares of Apple.