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Is an Apple Dividend Imminent?

Looking for a good reason to buy Apple? We may have uncovered a whopper.

According to Morgan Stanley analyst Katy Huberty the tech titian could soon attract a truckload of new capital - with the announcement of a dividend! “It’s now it’s more likely than ever,” she says.

Here's why.

With Apple on the edge of going from the #2 to the #1 largest US company by market cap, Huberty thinks a dividend could be just the catalyst to push Apple permanently into the top spot – and bump Exxon onto the back burner

But the quest to be #1 comes with a price.

If they want to secure that top position, “it’s important the company looks for ways to expand its investor base,” Huberty explains. “And a return of cash in the form of a dividend would bring value investors into the stock.”

And why not? Huberty tells us it’s something Apple can easily afford. She’s crunched the numbers and says Apple could pay a dividend and still have plenty of cash on hand in case they need it.

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”The company will have $100 billion cash in the bank in 6 months and is generating $30 - $40 billion in cash a year. That leaves plenty of money to both announce a dividend as well as keep money in the bank for a rainy day.”

In addition, Huberty has done some proprietary research and thinks the timing is favorable.

”Our work suggests the best time to initiative a dividend is when earnings is growing double digits and accelerating and we think that period is now – given the Apple product launches we expect over the next couple of quarters.”

Don't believe it? Huberty thinks Apple may already be sending signals – though in a stealth Apple kind of way.

”The company has had much more open dialogue with investors about cash use -- and the company already accrues taxes on a majority of its foreign earnings which flows through as a cost on it earnings statement. There’s really no reason to do that unless it plans to bring that cash back to the US and put it to use.”

Largely the Fast Money traders don’t see it.

Mike Khouw says the options market isn’t really flagging it. "If options traders were expecting dividend increase the puts would increase in value relative to the calls and we haven’t seen that."

Trader Stephen Weiss thinks a dividend would almost generate a stigma. “Dividends are for old tech. This is new tech. I don’t think it’s for Apple.”

Trader Brian Kelly also doesn't see it. "Apple’s culture is built on innovation not paying dividends," he says.

Only trader Steve Cortes sides with Huberty. "I think it’s sensible and it could finally happen now that Steve Jobs isn’t there on a day to day basis," he says.

Although he doesn't expect a dividend, trader Joe Terranova thinks Apple has plenty of upside. "I think the stock trades north of $400 in the next 6-8 months," he says. By contrast, Huberty’s prices target is $468, however she sees the potential for Apple to trade as high as $540 by 2013.






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Trader disclosure: On Sep 13 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns Apple (AAPL); Seymour owns Bank of America (BAC); Seymour owns Intel (INTC); Adami Owns (AGU); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Finerman and Finerman’s firm own (AAPL); Finerman owns (BAC) and Finerman’s firm own (BAC) leaps; Finerman owns Microsoft (MSFT); Finerman owns Google (GOOG); Finerman owns JPMorgan (JPM) calls, puts and stock; Finerman owns Oracle (ORCL); Finerman’s firm owns Collective Brands (PSS); Finerman’s firm owns JPMorgan (JPM) puts; Finerman’s firm owns (CMI); Finerman’s firm owns Microsoft (MSFT); Finerman’s firm owns IBM (IBM); Finerman’s firm owns S&P 500 puts; Finerman’s firm owns IWM; Finerman’s firm owns MDY; Finerman’s firm owns SPY; Terranova owns (XOM); Terranova owns (DIS); Terranova owns (WFM); Terranova owns (LULU); Terranova owns (MSFT); Terranova owns (TM); Terranova owns (JWN); Terranova owns (ORCL); Terranova owns (PEP); Terranova owns (MA); Terranova owns (BX); Terranova owns (GS); Terranova owns (DAR); Terranova owns (CAT); Terranova owns (VRTS); Terranova owns (AAPL); Terranova owns (CAT); Terranova owns (CVI); Terranova owns (IBM); Terranova owns (FCX)

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of Building Materials Holdings
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LHO)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of Sun Pharmaceutical Industries Ltd
Virtus Investment Partners Owns More Than 1% Of (RLI)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of Domino's Pizza UK & IRL PLC

For Jim Iurio
Iuorio is long Microsoft (MSFT)

For Katy Huberty
Morgan Stanley Owns 1% Or More Of (AAPL)
Morgan Stanley Expects To Receive/Seek Investment Banking Compensation From (AAPL) In Next 3 Months
Morgan Stanley Has Received Non-Investment Banking Compensation From (AAPL) In Last 12 Months
(AAPL) Is Or In Last 12 Months Was An Investment Banking Client Of Morgan Stanley
(AAPL) Is Or In Past 12 Months Was A Non-Investment Banking Client Of Morgan Stanley
Morgan Stanley & Co. LLC Is A Market Maker In (AAPL)

For Mike Murphy
Rosecliff Capital owns (CMI)
Rosecliff Capital owns (CNW)
Rosecliff Capital owns (TWI)
Rosecliff Capital owns (ANF)





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