Apple Inc.'s ability to pay a special dividend, viewed byinvestors as unlikely, is limited because almost 70 percent of itscash is outside the U.S.

While dozens of companies are paying special one-time dividendsahead of a potential jump in taxes, Apple probably won't join inpartly because so much of its $121.3 billion in cash is heldoverseas, according to analysts. Apple is likely to focus onboosting its quarterly $2.65-a-share dividend, said Brian White ofTopeka Capital Markets Inc.

Oracle Corp., Wal-Mart Stores Inc., Costco Wholesale Corp. andat least three dozen other companies have announced specialdividends this quarter, according to data compiled by Bloomberg.The payouts come ahead of a potential rise in the top federal taxrate on dividends to 43.4 percent from 15 percent next year as partof the so-called fiscal cliff, a blend of tax increases andspending cuts that will take effect if U.S. lawmakers don't forge abudget deal.

Apple doesn't share the same concerns as other companies overthe tax increase, White said.

“That's not how they operate,” White said in an interview. “Theywon't be driven by some transactional event — it's just not theirstyle to try to game taxes or game the market.”

Steve Dowling, a spokesman for Apple, declined to comment.

White's comments matched those of Wall Street analysts such asChris Whitmore of Deutsche Bank AG. Instead of the specialdividend, investors can expect Apple to increase its current payoutby at least 10 percent, said Abhey Lamba, an analyst with MizuhoSecurities USA.

“They will continue to give that dividend and will probablystart growing it,” Lamba said.

Much of the company's cash flow is being used for the dividendannounced this year, Lamba said.

Investors are more concerned that Apple's long-term growthprospects may be fading, rather than whether the company will pay aspecial dividend, said Andy Hargreaves of Pacific Crest SecuritiesLLC. Increased competition for the iPhone and iPad, as well asinvestors selling shares to avoid paying higher capital gainstaxes, have contributed to the stock losing almost a quarter of itsvalue since hitting an all-time high in September, he said.

Cupertino, California-based Apple fell less than 1 percent to$529.82 yesterday in New York. While the stock has declined 25percent since hitting an intraday record high of $705.07 on Sept.21, it remains up 31 percent so far this year.

Reinstated Dividend

Apple reinstated dividends starting in the quarter beginningJuly 1 and adopted a plan to buy back $10 billion in shares overthree years. Investors saw that as a sign Chief Executive OfficerTim Cook was more willing than late co-founder Steve Jobs tochannel part of cash and investments directly to investors.

The moves will cost $45 billion over three years and expandApple's investor pool, Cook said at the time. Apple last paid adividend in 1995, before Jobs returned as CEO and led theintroduction of top-selling products including the iPod, iPhone andiPad.

Even while distributing more cash to investors, Apple willcontinue to add to its cash reserves, with its balance sheetreaching $250 billion by the end of 2015, White said.

“This is a cash gusher,” White said.

In an interview last week with Bloomberg Businessweek, Cook saidthat Apple's cash was being managed with “the most conservativeinvestments known to man” and that he was “involved heavily” in thedecision to distribute the funds.

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