Many have wondered what corporate America will do after the new tax law is passed by the White House. According to Gene Munster at Loup Ventures, Apple will repatriate $214 billion in cash overseas using a one-time 15.5 percent tax rate. But what will Apple do with the money?
Munster believes Apple will not change its merger and acquisition strategy, sticking to its current strategy of buying companies worth less than one billion dollars. What the company is likely to do is increase its share buyback by $69 billion, and offer an annual dividend of 15 percent.
Increasing the dividend and stock buyback would still leave Apple with around $270 billion in cash at the end of 2022. Currently, Apple has 269 billion in cash, with $17 billion held in the United States and $252 billion overseas. According to Munster, Apple would pay $31 billion in taxes to repatriate the money, and increase the share buyback and dividend over the next 3-4 years.
Apple has already spent $166 billion on share repurchases over the past five years. The new tax law would result in an additional $69 billion devoted to the program. The analysis points to an announcement from Apple regarding the changes during the quarterly report in April 2018.The company would remain at its current debt level, with approximately $104 billion in debt carrying an interest rate of 2.2 percent.