In order for Apple to extend its 21 percent rally this year to record levels, investors want the world's largest company to issue a monster buyback and dividend increase by April. The size of that capital return program will depend on repatriation reform agreed upon between President Barack Obama and the Republicans in Congress. Influential UBS technology analyst Steve Milunovich sent a note to clients Tuesday that could possibly be considered the first negative one issued by Wall Street on America's favorite stock this year…sort of. "We believe a muted increase and shorter completion period (for the buyback and dividend) are possible due to potential U.S. tax reform, increased dependence on debt issuance for buyback funding, the stock's higher multiple, and greater domestic capex requirements," said Milunovich, who still has a "buy" rating on the stock. "The repurchase amount could be as low as $20 billion over one year." That amount would fall way short of the Street's expectations and likely weigh on the stock. The three-year anniversary of its monster capital return program comes in April, so analysts are expecting an announcement any day now. Credit Suisse said in January that Apple will announce a $200 billion capital program with $165 billion of that put toward a buyback over the next three years. A dividend and buyback of that size would be larger than the market capitalization of 489 members of the S & P 500. Read More Apple to return $200 billion to shareholders: Analyst As part of his 2016 budget plan, Obama has proposed a one-time 14 percent tax on foreign profits. His camp argues that the one-time tax break (lower than 35 percent current rate) would encourage companies to bring cash back on American shores, but skeptics argue the plan is a nonstarter because it isn't permanent and is still too high. "Should any such legislation be enacted, we presume Apple would direct a good portion of its future earnings to additional capital return. Unless existing accumulations could be repatriated at a lower rate than the President's 14 percent proposal, we don't believe Apple would be inclined to repatriate its existing $160 billion in foreign cash," Milunovich said. Apple shares hit another record on Tuesday, rising above $133 a share. Despite repeated positive notes on the stock, that price exceeds the $133.15 average 12-month price target of analysts, according to FactSet. So with no share appreciation predicted by this always-bullish group, it's all up to the size of this dividend and buyback increase to carry the stock's return. Of the nearly 50 analysts who cover the stock, only two have "sell" ratings, FactSet data shows. —With reporting by Michael Bloom
