Apple Inventory Dividend Evaluation: August 2023 Version

Apple Stock Dividend Analysis: August 2023 Edition

In December 2018, you might purchase a share of Apple (AAPL) for about $40, adjusted for the 2020 inventory break up. At the moment, that share is value upwards of $175. Look again additional in time and you may see, this is not an anomaly. The iPhone maker has a protracted historical past of manufacturing spectacular capital good points for its shareholders.

However what about dividends? Can a slice of Apple generate good points and money revenue? The solutions are beneath, together with an evaluation of AAPL’s key dividend metrics.

Does Apple Inventory Pay Dividends?

Apple inventory does pay dividends. The present Apple inventory dividend per share is $0.24 quarterly—paid in February, Could, August and November. The corporate has raised its dividend yearly since 2012.

Previous to 2012, although, Apple’s dividend efficiency was much less spectacular. The quarterly dividend remained flat between November 1990 and December 1995, for instance. Then it disappeared for 17 years, till Apple resumed the shareholder payouts in 2012.

At the moment, buyers largely ignore Apple’s older period of dividends—selecting as a substitute to concentrate on the present dividend yield, complete return, payout ratio and dividend development proportion. Learn on to dive into these metrics and perceive how they may also help you resolve if AAPL has a spot in your portfolio.

Apple Inventory Dividend Yield

Dividend yield is the annual dividend fee divided by the corporate’s present inventory worth. The ensuing proportion is a measure of revenue effectivity. It solutions this query: For every greenback I make investments on this inventory, how a lot can I earn in dividends?

Yield can also be a metric you should use to match the revenue potential of 1 inventory to a different. A excessive dividend yield equates to extra revenue potential for a similar funding quantity.

This is an instance. Apple’s dividend yield is 0.55%. That is based mostly on Apple’s newest quarterly dividend of $0.24 multiplied by 4 and a inventory worth of $174.49.

In case you spend $1,000 shopping for AAPL shares, your estimated annual dividend revenue is $5.50. Evaluate that to a different tech large, Microsoft (MSFT), whose dividend yield is 0.86%. Purchase $1,000 value of MSFT and also you’d anticipate $8.60 in dividend revenue.

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So MSFT is healthier from an revenue standpoint than AAPL. However this does not routinely imply MSFT is a greater inventory. There are different elements to think about alongside a yield comparability, together with:

  • The inventory’s complete return historical past, which incorporates dividend yield and capital good points
  • Your personal objectives and threat tolerance
  • The sustainability of the dividend, generally measured by payout ratio and earnings development
  • The inventory’s dividend development historical past, which factors as to whether the dividend will preserve tempo with inflation and stay aggressive over time

Let’s speak by every of those in additional element.

With inflation working at 3.0%, dividend shares provide probably the greatest methods to beat inflation and generate a reliable revenue stream. Obtain 5 Dividend Shares To Beat Inflation, a particular report from Forbes’ dividend professional, John Dobosz.

Whole Return

There are two methods to make cash on shares. You possibly can earn huge capital good points or money dividends. Some shares produce one or the opposite, or a bit of every. Usually, a inventory that delivers enormous capital good points pays low or no dividends. The reverse can also be true: A inventory that has an enormous dividend yield usually will not ship a lot in the best way of capital good points.

Whole return measures a inventory’s good points and dividends. This enables for comparability of shares regardless of how they return worth to shareholders.

AAPL reveals the usefulness of a complete return evaluation. In case you look solely at Apple’s dividend, the inventory shouldn’t be spectacular. The 0.55% dividend yield pales compared to the 1.62% dividend yield of the S&P 500 index, for instance.

AAPL is way extra interesting from a complete return standpoint, nonetheless. The corporate has produced a median 25.1% annual return for its shareholders over the past 15 years. For reference, Microsoft’s 15-year common complete return is decrease at 18.3%—regardless of that firm’s increased dividend yield.

Objectives And Danger Tolerance

You are extra more likely to settle for Apple’s low dividend yield in case your purpose is to put money into a strong firm with long-term development potential. In that mild, you’d doubtless reinvest the dividends to develop your place sooner.

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In case your purpose is to maximise revenue, nonetheless, Apple’s dividend yield is just too low. You’d search out higher-yielding shares that also fit your threat tolerance.

Payout Ratio

Payout ratio is the share of an organization’s revenue that will get paid out in dividends. You calculate payout ratio by dividing fundamental EPS (earnings per share) into the 12-month dividend quantity. This can be a helpful metric for assessing the sustainability of dividend funds.

A really excessive payout ratio can come up when an organization’s earnings decline. To proceed supporting the dividend on decrease earnings, the corporate should handle with lesser funding for capital expenditures, analysis and improvement and different development initiatives. Decrease funding in these areas is likely to be workable briefly, but it surely’s not viable long-term.

Until the enterprise can restore earnings, a dividend lower is the more than likely resolution.

For that reason, buyers usually desire payout ratios beneath 80%, with some exceptions. A enterprise mannequin that produces predictable money stream with restricted want for innovation may function comfortably with a 90% payout ratio. Corporations with much less visibility into future earnings and heavy development budgets can’t.

Apple, as a expertise firm that launches new product iterations yearly, falls into the latter group. Luckily, the corporate maintains a low payout ratio of 16%. That is calculated with the final 12 months of dividend funds ($0.94) divided by the cumulative fundamental EPS over the prior 4 quarters ($6).

Apple’s 16% payout ratio compares favorably to Microsoft’s payout ratio of 28%. It additionally compares favorably to Apple’s historic three-year, five-year and ten-year common payout ratios, that are 16.6%, 19.6% and 22.6%, respectively.

With inflation working at 3.0%, dividend shares provide probably the greatest methods to beat inflation and generate a reliable revenue stream. Obtain 5 Dividend Shares To Beat Inflation, a particular report from Forbes’ dividend professional, John Dobosz.

Dividend Progress

Dividend development is one other vital consideration for revenue buyers. Dividend will increase fight inflation and shield dividend yields over time.

A stagnant dividend, however, loses buying energy as costs inevitably rise. The longer that damaging development continues, the much less interesting the inventory will probably be. The inventory worth might ultimately plateau or decline consequently.

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Apple has an excellent monitor document of dividend development. As famous, the tech large has raised its annual payout every year since 2012. In recent times, the dividend enhance, adjusting for the 2020 inventory break up, has been $0.04 yearly—handed alongside to shareholders as a $0.01 per share increase in every quarter.

The annual dividend enhance since 2019 has fluctuated between 4% and seven% and averages to six%.

Apple Inventory Dividend Historical past

The chart beneath outlines the important thing dates and metrics of Apple’s inventory dividend for the final 5 years.

Word that the dividend quantities proven usually are not adjusted for Apple’s 4-for-1 inventory break up that was carried out on August 31, 2020. You possibly can see that after the break up, the money dividend dipped from $0.82 per share to $0.205 per share. The break up awarded shareholders 4 occasions as many shares however lowered the dividend by 75%. The online impact was no change for shareholders.

AAPL Dividend FAQs

Is Apple’s dividend low?

Apple has a low dividend yield of 0.55%. For context, the dividend yield of the S&P 500 is at the moment about 1.63%. That is almost thrice increased than Apple’s yield.

It may be a mistake to guage dividend yield by itself, nonetheless—particularly with a inventory like AAPL that has a demonstrated document of appreciation. Whole return, which incorporates dividends and capital good points, paints a broader image. Apple’s complete return averages a powerful 25.1% over the past 15 years.

How usually does Apple pay a dividend?

Apple pays a quarterly dividend. The fee dates fall in February, Could, August and November.

What number of years has Apple’s dividend grown?

Apple has elevated its dividend yearly for 12 years. The primary yr was in 2012, when Apple initiated a dividend after having not paid one since 1995.

With inflation working at 3.0%, dividend shares provide probably the greatest methods to beat inflation and generate a reliable revenue stream. Obtain 5 Dividend Shares To Beat Inflation, a particular report from Forbes’ dividend professional, John Dobosz.

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