Apple hints at boost in stockholder dividends
Tax cuts on overseas profits to pay for them
CUPERTINO, Calif. — Apple’s next big thing will likely be a large dividend increase financed by a tax cut on its overseas profits, but the famously secretive company isn’t giving any clues about how big it might be.
CEO Tim Cook had an opportunity to address the issue Tuesday at Apple’s annual meeting, when a shareholder asked if the iPhone maker might double its current quarterly dividend of 63 cents per share.
Not surprisingly, Cook dodged the question, rising from his seat because he said it suddenly felt “a little hot.” He all but guaranteed that Apple’s board will raise the dividend in April, as it has done each year since the company reinstated the shareholder payments in 2012, but didn’t giving any specifics.
Cook also disclosed that Apple’s music streaming service now has 36 million subscribers as it nears the third anniversary of its debut. Spotify, the music streaming pioneer that Apple is trying to upstage, has more than 70 million subscribers.
Apple is hoping to gain more ground on Spotify with an internetconnected speaker called the HomePod. The device is being touted as a high-fidelity speaker that can also serve as a digital disc jockey that learns listeners’ tastes so it can automatically play songs that they will like from Apple’s vast musicstreaming library.
Investors have been anticipating a substantial increase in Apple’s dividend since the company announced plans to take advantage of a temporary tax break championed by President Donald Trump to bring an estimated $245 billion in overseas cash back to the U.S.
The sweeping tax reforms passed by Congress in late December included a provision lowering the rate on companies’ overseas cash to 15.5 percent, below the 21 percent paid on profits made in the U.S. Before those changes, corporate profits held outside the U.S. were taxed at a 35 percent rate when brought back into the country.
Cook defended Apple when queried by a shareholder who wondered why a company that generated a $48 billion profit in its last fiscal year should benefit from reforms that some have derided as corporate welfare.
He said the previous system was unfair because it imposed unreasonably high tax rates on overseas profits after Apple had already paid taxes on the money to foreign governments. If the rate on overseas profits had remained unchanged, Cook said Apple and other U.S. companies would have left the money sitting in foreign accounts.
Apple will pay $38 billion on its repatriated cash and use some of the money to hire 20,000 more U.S. workers and build a second corporate campus in the country.