Is AAPL a dividend stock?

At one point today, the S&P 500 was down 3.6%.  That is another painful day for everyone. So, I figure this was another good buying opportunity. The S&P 500 is down 15% from its 52 week high. And the market could go down another 15%.  Lucky, my time frame is far enough out that I do not to report my next quarterly results to the market. So what to buy in this crazy market?

Is AAPL a dividend stock?

Well, Apple (AAPL), for a long time, did not pay a dividend. In 2012, Apple (AAPL) starting paying a dividend. Currently, their dividend yield is a little over 2%. Not the best for a dividend stock, but there is more. They are only paying out 22% of profits. This will help them increase their dividend payout ratio in the future. And with their large cash balance, they can keep buying back shares, which will also increase their dividends.  Their PE ratio is only a 10.2, which is low enough to be a value play.

This will not happen, but over the next year, Apple (AAPL) could buy back 20% of its stock with cash on hand and its earnings. Then they could increase their dividend to 50% of earnings. The math works out to increasing earnings to over $11 per share. Then we increase the dividend to 50% of earning, making a dividend payment of $5.50 a share. This would get us to a yield of 5.8% in 1 year. Now Apple (AAPL) has a lot of users for its cash. But it is possible and we expect a large yield on our cost.

What we Bought

Therefore, we bought 3 shares of Apple (AAPL) for $289.42 with commission. This will give a nice $6.32 a year in dividends. And we expect this to increase a lot into the future. Not a bad setup, considering they are one of the coolest companies out there.

Is AAPL a dividend stock? Let me know what you think.

You can review more stock purchases here.

Discloser: Long AAPL

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5 thoughts on “Is AAPL a dividend stock?

  1. I’m amazed, I have to admit. Rarely do you encounter a blog that’s both educative and entertaining, and without a doubt, you’ve hit the nail in the head.
    The problem is an issue that not sufficient folks are speaking intelligently about. I am just delighted i found this during my look for something concerning this.

    1. Thanks FXS. I try to be both. There are a lot of people with opinions on Apple (AAPL). Time will tell if I am correct or not.

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