Apple will soon make public its plan for a big chunk of its $137 billion cash pile, said Will Power, senior research analyst at Robert W. Baird, on Tuesday.
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"I don't think it's any question we are going to have an announcement here at some point. I think we and the Street have been expecting something any day really for the past several weeks," Power said on CNBC's "Squawk on the Street." "I think you've seen that in the recent price action both speculation regarding a potential bigger dividend and probably more importantly, a sizable buy-back, I think that's the biggest driver right now around the recent stock action."
Tuesday is the one-year anniversary of Apple announcing its plan to distribute $45 billion during a three-year period on quarterly dividends and a share repurchase program, and many investors are betting the tech giant will announce an increase to the dividends and buyback program sometime soon.
Power, who has a neutral rating on Apple's stock with a price target of $465, said Apple can afford to significantly increase its dividends and would benefit from doing so.
"Stronger dividends and stronger buybacks is something that should help at least on the margin," Power said. "They are paying $10 billion a year on their dividend right now, they're generating $40 billion in free cash flow, that could easily be a $15 billion number, maybe even a $20 billion annual dividend number."
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But just because Apple has the money to distribute more money to shareholders via dividends and buybacks doesn't mean it will.
CEO Tim Cook said in late February at Apple's annual shareholder meeting that the company is "seriously considering" returning cash to shareholders, however, no specific plans have been confirmed.
The iPhone and iPad maker could invest its cash into R&D or make acquisitions. However, it's unlikely Apple will take either of these routes because it doesn't really make sense for the company, Power said.
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"The reality is, you know, I guess they can increase their spending in R&D, but this is a company that wants to focus on a few great products, so I don't think there's that much more they can do to the R&D engine per se," he said. "They could look at big acquisitions, but that hasn't been a part of their DNA, so I don't think that is something that I would encourage at this point. Even if they were to buy something like Netflix and Twitter, that really doesn't move the needle really significantly for them."
Apple's stock has suffered a steep decline since its all-time high of $705 last fall. While a dividend hike and bigger repurchase program may send the stock price back up, the bump in stock price would be short-lived, Power said.
"I think what you could ultimately see is something we saw last year, where you saw a run-up into the cash distribution announcement and then the stock pulled back into the May time frame. I think it could play out similarly," Power said.
While earnings estimates for the March quarter will likely be on target with the Street's estimates, the June estimates are too high and Apple missing that target could cause the stock to take an even bigger dive, he said.
"The street is calling for revenue and earnings to decline about 5 percent sequentially from the March quarter to the June quarter, our estimates are calling closer to a 15 percent decline. So my concern is the June quarter disappoints and the stock weakens again."