Stifel Expects Apple To Boost Its Cash Returns To Shareholders, Hikes Price Target

In a report published Wednesday, Stifel analyst Aaron Rakers wrote that

"very strong" free cash flow coupled with its recently announced debt issuance comments that it would not be "hoarders" of cash has left high expectations of a strong capital return message in April. Rakers noted that since September 2012, Apple has returned 78 percent of its free cash flow, reduced its share count by 11.4 percent while maintaining an annualized dividend payout in the $10 billion to $11 billion and increased its quarterly dividend per share payout by 15 percent and eight percent in 2013 and 2014, respectively. "We believe Apple has more than enough capacity to increase its quarterly dividend significantly – up to $13.5 billion to $14.0 billion/annum (~$2.30-$2.40/share)," Rakers wrote. "We believe investors could look at Apple's potential dividend increase as a key proxy on the company's free cash flow expectations when considering Apple has averaged a dividend payout of ~23 percent when compared to TTM free cash flow over the past few years." Rakers also added that "platform effect" of Apple, and the company's strong fundamentals will continue to resonate as a strong underlying positive for shares. Shares were maintained with a Buy rating with a price target raised to $150 from a previous $130.