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Street betting on Apple dividend boost

Apple has a "quality" problem—what to do with all its cash, TD Ameritrade chief strategist JJ Kinahan said on Monday. Investors are betting a chunk of it will be returned to them.

In fact, Kinahan said his firm's clients have bought a lot of Apple this month. It was also TD Ameritrade's No. 1-held stock last year and No. 1 stock traded last year, he added.

"I think one of the reasons people are doing it is an expectation of some return," he said in an interview with "Closing Bell."

Investors are eagerly waiting to see how much the tech giant plans to hike dividends and how much stock it will buy back when it releases its second-quarter earnings later this month.

Shoppers at an Apple store in New York.
Scott Mlyn | CNBC
Shoppers at an Apple store in New York.

Last year, Apple returned $56 billion to shareholders, more than any other company has returned, according to S&P Capital IQ.

Piper Jaffray analyst Gene Munster is anticipating a new $150 billion capital return program this year, and thinks anything less would be seen as a disappointment by investors.

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However, Jon Najarian, co-founder of OptionMonster.com, said the Street expectations are a bit lower at $130 billion.

"They know that Apple just raised a bunch of more cash overseas in euro terms and at much lower rates than they can get in the United States so they continue to manage their money very effectively," Najarian said.

"People are willing to bet on them because of the app store, because of iTunes, even though music sales are declining."

Walter Isaacson, president and CEO of The Aspen Institute, thinks the talk of massive capital returns is just another sign of Apple's success.

"It's got so much cash," said Isaacson, also a CNBC contributor.

That said, in general, he has always been a bit skeptical of capital returns.

"I worry that we are in a corner, in a whole period, in which a lot of companies can't quite figure out what to do with their capital and they're doing a lot of stock buybacks and capital returns and to me that shows a slight lack of innovation or optimism," he said.

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However, Kinahan noted that Apple can still innovate and return cash to shareholders.

"Nobody's ever had cash flows like this before, it's so immense that they do have good plans going forward but there's still excess cash leftover," he said.

While investors are currently focused on dividends and stock buybacks, Najarian said there is something else to bear in mind—Apple could announce a major deal this year.

"I'll be surprised … if one of the things they do is not a big deal this year because they have obviously not that big multibillion-dollar deal. I look for such a deal beyond that a Beats deal this year," he said.

—CNBC's Josh Lipton contributed to this report.

Disclosures: JJ Kinahan is long Apple. Jon Najarian owns Apple in wealth management business.

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