Are dividend hopes driving Apple's shares higher? - MarketWatch (blog)

Apple's shares managed to defy the sharp market downturn on Friday, logging a small advance by midday and drawing nearer to the $500 milestone.

The shares have now risen about 18% since the company reported blow-out earnings results on Jan. 24. Much of the gains have come from higher estimates for Apple's two key products – the iPhone and iPad. The iPhone alone now accounts for more than half the company's total revenue base, and the device still has highly limited distribution in China, a major global market. With the iPhone 5 expected in late-summer, and a new iPad predicted by the March-April timeframe, analysts see a strong year ahead for the company.

However, another factor that could be adding to investor enthusiasm is the possibility that the company may reverse its long-standing avoidance of paying a dividend. Apple's cash hoard is now close to $100 billion, and more investors and analysts are looking to the company to consider returning at least some of that to shareholders.

Apple  /quotes/zigman/68270 /quotes/nls/aapl AAPL will be holding its annual shareholder meeting on Feb. 23, and Sterne Agee analyst Shaw Wu wrote in a note to clients on Friday that he believes the topic of a dividend "will likely be discussed, and we view that as a potential positive catalyst for shares." Abhey Lamba of Mizuho Securities initiated coverage of Apple on Thursday, and also added that "we expect management to initiate a dividend and start buying back its stock over the next year, which should further support the stock price."

Even at $500, Apple shares are still below most of Wall Street's price targets, with at least 24 analysts having targets of $600 or higher. Apple shares were last up about 0.6% to $495.90.

- Dan Gallagher

Are dividend hopes driving Apple's shares higher?

Apple's shares managed to defy the sharp market downturn on Friday, logging a small advance by midday and drawing nearer to the $500 milestone.

The shares have now risen about 18% since the company reported blow-out earnings results on Jan. 24. Much of the gains have come from higher estimates for Apple's two key products – the iPhone and iPad. The iPhone alone now accounts for more than half the company's total revenue base, and the device still has highly limited distribution in China, a major global market. With the iPhone 5 expected in late-summer, and a new iPad predicted by the March-April timeframe, analysts see a strong year ahead for the company.

However, another factor that could be adding to investor enthusiasm is the possibility that the company may reverse its long-standing avoidance of paying a dividend. Apple's cash hoard is now close to $100 billion, and more investors and analysts are looking to the company to consider returning at least some of that to shareholders.

Apple will be holding its annual shareholder meeting on Feb. 23, and Sterne Agee analyst Shaw Wu wrote in a note to clients on Friday that he believes the topic of a dividend "will likely be discussed, and we view that as a potential positive catalyst for shares." Abhey Lamba of Mizuho Securities initiated coverage of Apple on Thursday, and also added that "we expect management to initiate a dividend and start buying back its stock over the next year, which should further support the stock price."

Even at $500, Apple shares are still below most of Wall Street's price targets, with at least 24 analysts having targets of $600 or higher. Apple shares were last up about 0.6% to $495.90.