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Shares of Apple Inc. rose on heightened optimism that the tech-giant would announce a record-breaking increase to its stock repurchase and dividend plan when it reports its quarterly results this week.
Apple shares rallied almost 2 percent amid a decline in the broader market. The iPhonemaker had fallen into correction territory in recent weeks on concerns over weak iPhone sales. It posts earnings after the end of the trading session on Tuesday,
The capital return plan is part of the firm's redistribution of repatriated profits abroad. The recently adopted tax overhaul brought the rate on repatriated cash to 15.5 percent from 35 percent tax rate. According to Apple in January, it expects to pay around $38 billion in taxes on what it plans to bring back to the country, indicating that it will repatriate almost all of its $250 billion in overseas profits.
Several Wall Street firms have issued bullish outlooks for the capital return program in recent weeks.
Morgan Stanley anticipates that the company will boost the capital return program by $150 billion. In a note to clients in April, Morgan Stanley analyst Katy Huberty said this would imply the company repurchases $210 billion in shares and pays $52 billion in dividends over the next three years. She said this would still leave around $30 billion on the table for acquisitions.
Meanwhile, British newspaper The Times, which cited 'several analysts' reported that the increase could be as much as $400 billion. Citi estimated earlier in April that Apple would utilize the proceeds from the tax reform to boost its stock repurchase and dividend program by as much as $100 billion.
Longbow Research also issued a bullish prediction for the capital return expansion program. The firm estimated in April that the company could increase its dividend by twofold and have its payout level still in line with its large tech competitors.
