SAN FRANCISCO — After Apple broke with tradition earlier this week by issuing a dividend, investors are waiting to see who among the non-dividend-paying tech firms will follow suit.
The company that is seen at the top of shortlist is Google.
With $44.63 billion in cash and cash equivalents on its balance sheet as of Dec. 31, the search behemoth is the most cash-rich tech company among the big dividend holdouts. In fact, it is now the only tech company with a market cap above $100 billion that does not offer a dividend.
And while Google has not even hinted at offering a dividend anytime soon, some analysts believe the company is the most likely contender among its peers to consider one.
“We found that Google has the greatest capacity to return cash,” Barclays analyst Anthony DiClemente said. “It probably has the most to gain in terms of positive sentiment by doing so, given its propensity for acquisitions and mixed investor sentiment around the Motorola Mobility deal.”
But there is a problem with that view. Google is about to spend $12.5 billion of its cash stash on that Motorola Mobility deal.
The firm also has about $4 billion in debt on its books.
In addition, a big chunk of Google’s cash is held in overseas accounts and cannot be brought home without a massive tax hit, making the company seem a far less likely dividend candidate that it does at first glance.
“With the completion of the Motorola Mobility deal, Google would have only around $3.5 billion in net US cash/investments,” S&P Capital IQ analyst Scott Kessler said. “We think CEO Larry Page has reasons to practically and philosophically favor other uses of capital and do not see a dividend anytime soon.”
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