Dividend creation for Apple?

I thought that the whole purpose for dividend creation was to stimulate interest in a particular stock’s ownership. What better barometer do we need than the already sky-high price

Apple Store - Upper West Side (New York City)

and growth curve of Apple stock? Why not continue to hold solid cash reserves and invest surpluses in R&D projects.

Dividends may lure a few more investors, but well-chosen and funded R&D projects create long-term value and viability. Yes, dividend creation can fund corporate capital through stock price increases, but stock prices are really just bets on future demand. Stock prices may wax and wane throughout a corporation’s lifespan. Cash, patent holdings, and product R&D (past, present and future) are the real armor that a company needs to thrive.

Corporate warfare is just like any other kind of warfare, where the supply sergeant needs quick and uninterrupted access to supplies. Effective military logistics demand a quick response to the needs of the front line. Cash supports logistics like nothing else.

Traditional cash bloat vulnerabilities are not a current problem for Apple. And cash poor “innovation” companies will almost always become new meat for the giants and find their patents working to fund someone else’s dreams.

Kevin Kelleher at InvestorPlace has a great article titled, An Apple Stock Dividend in 2012? Keep Dreaming that illuminates the history and landscape of Silicon Valley’s financial environment.

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One thought on “Dividend creation for Apple?

  1. I agree. Unless the company thinks that stockholders will make better use of dividends (that is stakeholders will get better returns if money is invested elsewhere) than it can, there is no reason to give dividends. But then, as you say, there are other reasons, though not always in the interest of stockholders 😦

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