In mid January, Apple which has $252 billion in bank accounts outside of the US, announced it had plans to bring back the cash to the US. In an article by Alex Webb and Mark Gurman of Bloomberg News, Apple noted due to the lower tax rate, it would still pay $38 billion in taxes. In addition Apple re-announced plans to spend money on new campus for 20,000 jobs, data centers and possibly manufacturing.

The new tax lowers the rate cash will taxed at to 15.5%, less liquid assets at 8% and companies can pay the treasury over 8 years. Apple had the largest offshore reserves on any American company. Apple which traditionally sources near 100% of its manufacturing outside the US, will be spending up between $1 and 5 billion in the US to be considered American made.

Linking to dividend paying stocks, the passing of the US tax cut was a gift to companies similar to Apple for the large tech companies were selling and keeping their funds offshore or outside of the US. While you can debate whether it is good for the US economy or not, it is definitely good for the companies. As investor you need to see if Apple has an extra $200 billion in cash it needs to do something with it – higher dividends, stock buybacks, research and development, mergers, etc. The first two will benefit you if you own the stock directly or through funds that hold large shares of Apple. Given the company has in excess of $200 billion to use, this means the risk reward for you is lower and Apple remains a multi year hold.

There are more questions than answers, till the next time – to raising questions.