Apple (NASDAQ:AAPL) is presently trading at 589.26, just off the 600 level it has flirted with just a day earlier. With all this money that the company is accumulating one wonders where it will end up. Some investors are secretly hoping for a dividend to develop out of all this wealth. The last time Apple gave out a dividend, Michael Spindler was CEO. As recently as January of this year, an analyst on CNBC declared 2012 the "Year of the Apple Dividend!" I do not seeing the dividend destination as realistic in 2012.
First of all Apple is not a company that needs to rely on dividend investors. They are growing and have been growing. In 2012 it is looking at revenue increases of 29%. It does not need to attract dividend investors, it is growing and investors are flocking. It seems that Apple's philosophy would be to keep a large stockpile of cash as a cushion for its state-of-the-art research so it can continue to pout out industry leading tech-ware. With large sums if cash, it could afford to make a mistake here or there. With a track record like it has had, it is hard to argue that Apple's earnings retention philosophy is wrong. Keeping the profits instead of giving it back to shareholders in the form of dividends has paid off handsomely in the form of value and growth.
Secondly, all the money is not here-not in the U.S. that is. Foreign sales growth, especially in Europe, Japan, and the Asian markets has blossomed for Apple. In 2005 41% of its revenue was derived from overseas. That percentage grew to 56% by 2010. The profit growth in Asia along grew by close to 3000% from 2005 through 2010 so expansion in the Asian markets will continue. A good bulk of Apple's revenue comes from overseas and will remain there. Taxes are too high to bring that money home. Holding almost $70 billion overseas, why bring it back and pay the taxman 35% of it.
It is true that President Obama recently proposed a new corporate tax rate that would reduce it from 35% to 28%. But that is still higher than the 25% the republicans are proposing. But honestly, even at 25% we are not going to see Apple pay Uncle Sam $17B anytime soon.
As for now, things will remain fairly pro quo. Apple will continue to be profitable and accumulate cash researching to remain an industry leader in technology.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.