Apple Is Likely To Take On Debt To Pay Out A Big Dividend, Says Bernstein

Robert Galbraith/ReutersApple is likely to announce its plans for a new, bigger dividend in May, weeks after it announces earnings, says Bernstein analyst Toni Sacconaghi.

Sacconaghi says Apple is talking to large shareholders about how it should distribute its cash. He has spoken with some of the shareholders, and he reported his findings.

We don't have the note, but Philip Elmer DeWitt at Fortune wrote it up.

The key bits:

• Shareholders want Apple to return 50% of free cash flow to shareholders on annual basis. This would equal ~$22 billion a year.
• If Apple does this, it could lift the stock by $30. If not, the stock could drop by $30.
• If Apple does it, it will do it as a dividend.
• And if Apple does it, it will probably take on debt to pay the dividend to avoid eating into its U.S. cash, or getting hit with taxes on its foreign cash.