This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Apple Investors Vent on Dividends, but What's Next?

Stocks in this article: AAPLF

NEW YORK ( TheStreet) -- Apple (AAPL) avoided mentioning a potential dividend at its shareholder meeting on Thursday, despite the company's ever-growing cash haul. With nearly $100 billion in cash on its balance sheet, calls for Apple to share some of its wealth with shareholders are reaching fever pitch.

Many commenters and tweeters on TheStreet's blog of Apple 's shareholder meeting were clamoring for a dividend announcement. "There will be some news today IMO about div.......there have been too many comments recently by CEO and CFO to leave it on the back porch," wrote mjohnh.

"Most attractive part of a possible dividend to me is the possibility of the shares being opened up to more funds," added Joe, a sentiment which was echoed elsewhere in the blog. "With a dividend, plenty of funds will now be able to purchase shares of apple," explained a commenter called John. "Will it see 600 before year end?"

There has been plenty of talk that a dividend could spur institutional investment in Apple. In a research note released on Friday JP Morgan noted that Apple's stock remains underowned institutionally. "Of the 282 mutual funds indexed to the Russell 1000, a surprising 40% do not have Apple as a top 10 holding - this despite the fact that Apple is the largest stock in the Russell 1000," explained JP Morgan analyst Thomas Lee.

There's clearly plenty of appetite for Apple to rethink its cash strategy, as evidenced by a commenter called 'p' on TheStreet's Live Blog, who urged Apple CEO Tim Cook to be more forthcoming on the dividend issue.

In a recent poll conducted by TheStreet, some 70% of respondents said that Apple should start paying a dividend again. The tech bellwether made its last dividend payment in 1995.

However, the dividend brouhaha poses the question: "Do Apple shareholders have a legal right to the cash, and could they sue Apple to get it?"

A famous example of suing a company to pay a dividend occurred almost 100 years ago, when the Dodge brothers sued Ford Motors (F) to try to extract a dividend.

In 1916, the Dodge brothers sued Henry Ford for keeping his company's cash, nearly $60 million (remember when $60 million was a lot of money?) and not distributing it to shareholders. Ultimately, the Michigan Surpreme Court ruled in favor of the Dodge brothers and forced Ford to declare a dividend.

The major difference, however, between Apple in 2012 and Ford in 1916 is that Ford was a closely held company, says Lynn Stout, visiting professor of corporate law at Cornell Law School.

"Essentially, corporate law reserves the right to say that if the board doesn't want to pay a dividend, the only recourse shareholders have is to replace the board or get them to change their mind," Stout recently told TheStreet. "Dodge v. Ford Motor still applied to closely held companies, but Apple is a public company."

She also explained that the Dodge v. Ford is frequently mis-cited, and is not applicable in this case.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,390.52 +195.10 1.13%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,630.7410 +64.6030 1.41%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs