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Apple Dividend Tops Dow Stalwarts ExxonMobil, AT&T

NEW YORK (TheStreet) - Apple (AAPL) isn't yet a Dow Jones Industrial Average component, however, the iPhone maker's dividend is poised to beat top payouts in the index.

Apple said on Tuesday it will increase its quarterly dividend to $3.05 a share as part of a plan to return $100 billion in cash to shareholders by the end of 2015.

Apple's dividend yield is about 3% based on Apple's current share price of about $406.

The company's annual dividend payments will be about $11 billion as a result of a 15% increase to its payout, topping Dow stalwarts such as ExxonMobil (XOM) and AT&T (T), according to a Tuesday analysis from Moody's.

"Apple, at $11.1 billion, will be the largest US non-financial dividend payer in 2013, ahead of Exxon and AT&T," Richard Lane, a Moody's senior vice president, wrote in a report issued Tuesday.

Overall, Moody's expects U.S. tech companies it rates to increase payouts 35% to $44.4 billion in 2013. Apple will drive about 25% of increased dividend payouts across the tech sector, according to Moody's. Excluding Apple, the firm expects dividends to grow 20%, to $33 billion.

While Lane sees the prospect of rising dividends because of the healthy balance sheets across much of the tech sector, he expects cash stockpiles held abroad to limit payouts this year.

To pay its increased dividend and fund a $50 billion increase in its share repurchase authorization to $60 billion, Apple said in a Securities and Exchange Commission filing it will borrow money.

"In conjunction with the expanded return of capital program, the Company plans to borrow and expects to announce more details about this in the near future," Apple said, without disclosing its lenders.

Although tech dividends may be on the rise, Moody's expects some sector bellwethers such as eBay (EBAY) and Google (GOOG) to retain rising profits.

"We don't expect Google and eBay to initiate dividends over the next year as they focus on domestic cash management and other strategic deployment of capital," Lane notes.

In second-quarter earnings, Cupertino, Calif.-based Apple reported second-quarter results that met analyst expectations, earning $10.09 per share on $43.6 billion in revenue.

The company sold 37.4 million iPhones in the quarter compared to 35.1 million in the year-ago quarter, while iPad sales rose 65% year-over-year to 19.5 million units per year.

Analysts polled by Thomson Reuters forecast the tech giant to earn $10.01 per share on $42.31 billion in revenue. Analysts surveyed by Estimize were looking for earnings of $10.70 per share on $42.76 billion in sales.

"We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad," said Tim Cook, Apple's CEO in the press release.

Apple is among the largest dividend payers in the world, with annual payments of about $11 billion," the company said of its increased dividend payout.

In the past six months, Apple reported it paid $5.30 in dividends a share, after introducing a payout in the fourth quarter of 2012.

For the fiscal third-quarter, Apple expects revenue will be between $33.5 billion and $35.5 billion, with gross margins between 36% and 37%, a guidance that generally came below the lowest analyst forecasts, according to Peter Misek of Jefferies.

Apple shares were falling slightly in after-hours trading to $406, giving up gains of about 5% after the earnings report.

-- Written by Antoine Gara in New York

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