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Why Apple's $16 Billion Payout Could Disappoint

Tuesday - 3/19/2013, 11:40am  ET

In the following video, Motley Fool senior technology analyst Eric Bleeker discusses some chatter coming from Bloomberg this week -- that Apple's dividend could jump up to $16 billion annually, which would equate to a 3.7% yield and a 56% leap from current dividend levels. That would put Apple near the top of technology's biggest dividend payers.

Company Yield
Intel 4.2%
Apple (Projected) 3.7%
Microsoft 3.3%
Cisco 2.6%

Yet, Eric also notes that in the short run, investing is all about expectations. Apple is typically very conservative with its cash management, and a $16 billion payout would roughly equal its cash generated in the United States. If it were to decide on a lower dividend boost such as a 30%, 40%, or 50% raise, that would still be a dramatic raise but would be below expectations.  Such a situation could actually leave investors disappointed despite Apple still paying a dividend on par with or above Microsoft's level. 

In the long run, such fears would be washed away, especially if Apple sees stronger growth in the latter half of this year or sets to raising its dividend or accelerating buybacks in coming years. However, Eric warns investors that big dividend expectations could lead to unexpected trading results in the short run. To see his full thoughts, watch the video below. 

There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, after the company's major backslide recently, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.