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3 Reasons Why Apple Shouldn't Pay a Dividend

Return on Equity

Apple has a return on equity (ROE) of 41.67% according to Yahoo! Finance, highlighting the company's massive profitability. It means that of every dollar Apple invests, it earns 41.67 cents in profit.

Other tech heavyweights pale in comparison to Apple's impressive ROE. Google (GOOG - Get Report), for example, has an ROE of just 18.66%, while Research In Motion (RIMM), and HP (HPQ - Get Report) come in at 21.43% and 17.73%, respectively.

One theory behind paying a dividend, of course, is that the company cannot find a better use for its cash, and as such, must return it to shareholders. This, however, is not the case at Apple.

Ironfire Capital's Eric Jackson said Apple has had a "phenomenal" return on its research and development dollars, especially when compared to software behemoth Microsoft (MSFT - Get Report). "I think Apple could make the argument that a high ROE is its way of saying it knows what is best for its cash." Jackson is long shares of Apple.
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AAPL $112.92 2.94%
GOOG $637.61 1.43%
HPQ $27.79 2.55%
MSFT $43.90 2.79%
FB $89.73 2.91%


Chart of I:DJI
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S&P 500 1,987.66 +47.15 2.43%
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