Apple Inc., approaching a $500 billion market capitalization,will probably start paying a dividend this year, attempting toappease investors who have said the electronics maker is hoardingtoo much cash.

The company is likely to declare a quarterly dividend of about$2 a share before the year is out, according to data compiled byBloomberg. The projections are based in part on the dividends paidby other large technology providers, including Microsoft Corp. andInternational Business Machines Corp.

An Apple dividend would be a boon to investors and wouldprobably yield benefits for the company, which has $97.6 billion incash and investments, and can afford the $7.46 billion a year thata $2 dividend would cost. A dividend could provide a boost to Appleby attracting a new class of investors that only hold stock individend-paying companies. Apple also may buy back shares, anothermove that could lift its stock price.

Chief Executive Officer Tim Cook said this month that officialsare in “active discussions” about what to do with the company'scash and investments, saying that the sum is “more than we need torun a company.”

Cook isn't likely to get much argument from investors.

“Why not do the sensible thing and begin to share part of thecapital that any rational person would say is beyond what thecompany needs to sustain itself with shareholders,” said KeithGoddard, CEO of Capital Advisors Inc., an Apple shareholder.

Other investors that have called on Apple to pay a dividendinclude Wedgewood Partners Inc. and Sustainable Growth AdvisersLP.

Analysts at Morgan Stanley, JPMorgan Chase & Co., MizuhoSecurities USA Inc. and Sterne Agee & Leach Inc. also predictthat Apple will institute a dividend some time soon.

Apple generated $16 billion in cash in the first quarter offiscal 2012. Shaw Wu, an analyst at Sterne Agee & Leach,predicts Apple will generate about $75 billion in new cash thisyear alone.

In determining its dividend estimate, Bloomberg takes intoaccount the dividend size of other large technology companies,Apple's projected earnings for next year and the amount of money onits balance sheet.

Steve Dowling, a spokesman for Apple, declined to comment beyondthe remarks made earlier by Cook.

Apple rose 1.8 percent to $535.41 at the close in New Yorkyesterday. The shares have climbed 32 percent this year.

Investors' PotentialBenefit

A $2-a-quarter dividend would mean hundreds of millions ofdollars in new revenue for Apple's top institutional investors.

Fidelity Management & Research Co., Apple's biggestinvestor, stands to make about $97.2 million each quarter, based onits holding of 48.6 million shares at the end of 2011. VanguardGroup Inc., the No. 2 holder, would make $74.4 million, while StateStreet Corp., Apple's third-largest investor, would make $69.5million.

Instituting a dividend might also provide a long-term boost toApple's stock price by bringing in investors who are restricted tobuying shares in dividend-paying companies, said Toni Sacconaghi,an analyst at Sanford C. Bernstein & Co., and Sterne Agee's Wu.With interest rates so low, investors are putting more money intodividend-paying stocks that regularly return money to shareholders,Wu said.

Apple may choose to make a one-time distribution, rather thanmaking a quarterly payment, said Doron Nissim, a professor ofaccounting at Columbia Business School in New York. A single payoutwould leave investors less vulnerable to subsequent increases intaxes on dividends, while also removing the risk to Apple's stockprice if they someday were to end the dividend, he said.

Apple last paid a dividend in 1995, before co-founder Steve Jobsreturned as CEO and led the introduction of top-selling productsincluding the iPod, iPhone and iPad. The final dividend, of 12cents a share, was suspended amid leadership upheaval and dwindlingcomputer-market share. According to a company filing, Apple's cash,equivalents and short-term investments dropped by about half, to$491 million, in the year through Sept. 29, 1995.

In the years since, Apple has ascended to become the world'smost valuable company, with a market value of $499.2 billion, morethan Exxon Mobil Corp. In January, the company reported recordprofit of $13.1 billion on sales of $46.3 billion.

“They can pay a very significant amount,” Columbia's Nissimsaid.

Overseas Accounts

Still, the amount of cash that Apple can use for dividendpayments is limited because the company keeps about 60 percent ofits money in overseas accounts. Apple's taxes were almost $4billion lower in fiscal 2011 than if it had reported all income wasearned in the U.S., Nissim said. And Apple could ultimately issue adividend bigger or smaller than $2 a share, or decide not todeclare a quarterly payout.

Jobs, who died in October, had long rebuffed calls to returnmoney to investors. Since taking over as CEO, Cook has signaled agreater willingness to heed the concerns of shareholders, includingcriticism that the company is stockpiling too much cash.

“The board and management team are thinking about this verydeeply,” Cook said last week at the company's shareholder meeting,reiterating earlier comments.

The closest analogy to Apple's situation is Microsoft, whichstarted to pay a regular dividend in 2003, said Columbia's Nissim,whose research includes the effectiveness of dividends. Microsoft,the world's largest software maker, also paid a one-time specialdividend in 2004, using $32 billion of its $56.4 billion inavailable cash at the time.

Apple and Google Inc., owner of the world's most popular searchengine, are the only technology companies with a market valuehigher than $100 billion that don't pay a dividend. In September,Microsoft boosted its quarterly dividend by 25 percent to 20 centsa share. Intel, the world's largest chipmaker, raised its dividendin May to 21 cents, from 18 cents. IBM pays a dividend of 75 centsa share. Cisco Systems Inc.'s quarterly payout is 8 cents ashare.

“The board and Tim Cook are feeling the pressure,” Mark Bronzo,who helps manage about $24 billion at Security Global Investors inIrvington, New York, said in a telephone interview. “It's verylikely that we'll see Apple pay a dividend, that we'll see Applereturn some cash to shareholders.”

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