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Apple is a cash flow machine: Analyst

Investors should expect a dividend increase and a bigger stock buyback when Apple reports earnings next week, Citi technology analyst Jim Suva said on Monday.

He projects the tech giant will raise its dividend by a minimum of 10 percent and boost the buyback from $90 billion to $120 billion. (Tweet This)

"Apple is a cash flow machine," Suva told CNBC's "Squawk on the Street." "They have too much cash, that's a good problem. They can give more back to shareholders."

Despite a recent downgrade by Raymond James, Apple's stock has been doing well. It was up 2.4 percent to $127.80 in midday trading Monday.

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The consensus on the iPhone would be beaten by about 5 million units, but in the future many more products will share the limelight, Suva said.

"We think iPhone is the focus today," he said. "They are rolling out with new products. Things like Apple phone, Apple Pay. We believe that there is more new products to come—whether it's advertising, TV broadcasting, Apple Passbook."

Customers look at the new Apple Watch displayed at an Apple Store in New York.
Mike Segar | Reuters
Customers look at the new Apple Watch displayed at an Apple Store in New York.

Apple is showing that it is not only in the phone-making business by adding products such as the Apple Watch and services such as Apple Pay, Suva said. He believes the company is looking at increasing its available market by focusing on growth opportunities.

The launch of the Apple Watch also highlights the popularity of Apple products. Demand has highly exceeded supply, according to Suva. That has led to shipments of some watches being pushed back to June and July.

"If demand is outstripping supply that's a great position to be in and that's what they are in right now," he said.

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On the subject of the possibility of Apple acquiring carmaker Tesla, Suva said he didn't have much to offer on that but that Apple had the means to do so financially. The company currently has a market cap of $740.7 billion compared to Tesla with $25.9 billion.

"People talk about the car, I am not sure about that but I definitely can say they have enough cash to do what they want and flex their muscles," said Suva.