“Trigger Event” Bullish for Apple Stock
Today’s chart highlights the coming Donald Trump “trigger event” for Apple Inc. (NASDAQ:AAPL).
In December, we told Income Investors subscribers to start buying cash-rich tech stocks. Readers have already earned double-digit profits, though we see more upside ahead.
The reason? President Trump has proposed a tax holiday allowing businesses to repatriate foreign cash holdings. If approved, the measure could save corporations billions in levies and spark the biggest wave of dividends in history.
And Apple shareholders might make out like bandits. Last quarter, the company reported $246.0 billion in cash on its balance sheet. Executives, though, have stashed $230.0 billion of this total overseas. Bringing this money stateside would trigger a big tax event, which is why management has parked these funds abroad. (Source: “Form 10-Q,” Apple Inc., December 31, 2016.)
That could change. Under Trump’s proposed plan, Apple could repatriate that cash at a low 10% tax rate. Based on some back-of-the-envelope numbers, that would lower the company’s IRS bill by $50.0 billion.
Most of that money will likely get passed on to shareholders. In the event Apple repatriates all of its overseas cash at once, management could pay out a big one-time dividend. Chief Executive Officer Tim Cook has enough foreign reserves to fork over a 25% special distribution.
To Read More: Could Apple Stock Issue a 25% Special Dividend?