Time to add Apple to your retirement portfolio

“As I write this Apple’s (AAPL) stock is down 42% from its peak of $705 a share,” Doug Carey writes via Seeking Alpha. “It has been a brutal nosedive for those who recently bought Apple hoping they would see some of the tremendous gains that other investors have over the past four years.”

“But those who are looking at the long-run dividend potential of Apple are cheering the fall in its stock price,” Carey writes. “Because of this decline Apple’s dividend yield is now a respectable 2.5%. But more than that, Apple has the ability to increase its dividend at a very healthy clip for years and even decades to come.”

Carey writes, “Apple has an astonishing $137 billion in cash on hand. That works out to $145 per share of stock. Also, its payout ratio (the fraction of net income paid as dividends to shareholders) is a very low 12%. These two facts set Apple up as a potential stellar dividend payer for many years… In fact, with a company like Apple, where we expect them to increase their dividend at a rapid rate for years to come, the change in the stock price becomes nearly meaningless. If you invested in 1,000 shares of Apple today, the dividend growth rate is 15% per year, and if their stock price doesn’t move, we see the following over 20 years.”

Comparing dividends vs. stock price

Read more in the full article here.

21 Comments

    1. Already got allot of shares unfortunately all higher prices then where we are today but not that much higher. I continue to add to my holdings of Apple. So I will better my break even as the shares go down. I’m a believer in Apple and what they can do. Another truly powerful thing is what Apple will be able to do with all that cash. Apple is a prudent user of cash but they are in an extremely favorable position. They can really help their suppliers with capital investment like now but even more, help with research spend more on their own R&D buy up patents ans technogy to create license revenue streams. they could even bail out Cyprus if they wanted to waste the cash. Anyway. Apple might have more competition today then ever before but what the competitors don’t have is 137 billion in cash. Only Samsung and Apple makes some form of profit today in the smart phone market. Everyone else, Nokia, HTC, BlackBerry etc are losing money. Lower prices, lower margins, less profit lower cost is the only way these companies can compete. That is not a favorable position. No one wants to be the commodity but these companies have no choice. They do what they have to do to exist. It’s survival. So Apple can do allot with its cash.

  1. Sadly I had to sell my meager amount of shares today. I just could not afford to go below the $400 line. That was a cut off point that I set for myself 3 months ago. My Apple stock is my 2nd back up emergency fund and I’m not one of these high salary people where I have money to burn or a ton of savings. But I will be looking for a point to buy back in and will keep that money hoarded away, unspent, waiting for that opportunity. It about killed me to hit that “SELL” button, but……had to do it. 🙁 A sad day for me indeed.

    1. I can see selling if you had to put food on the table or make your rent, but otherwise, well that’s sad.

      Apple could drop another two hundred and I’d still be at a profit. That’s long term thinking.

      I knew it would drop after Jobs death, and drop hard. When a dividend was announced I knew the dive would be harder.

      I also know how Apple works, the peaks dives, not worth worrying about over the short term. FUD has been around since Apple was first pronounced doomed by dimwits who still try to manipulate the stock and have fools that listen to then.

      If you sold it now, buy it back now, or soon. Ten, fifteen years from now, you’ll be thanking yourself that you did.

      1. You needed tell me about long term. This is no short term. I bought in when Steve returned, and have stuck through many peaks and valleys already. And yes, I’ve made out well from the initial investment, but I didn’t have hundreds of shares, and what’s left is money I may need (see my reply to Dresden Sparrow below). I lost as much as I could afford to loose. With this lousy economy there isn’t a lot of extra cash like their used to be after all bills and taxes are paid, and I don’t trust any employer anymore. Believe me, the sell was a last resort, and I do plan to buy back in, but just after all this frustrating bullshit manipulation is over and I think it’s reached what it’s going to reach thanks to all the asswipe anal-ists. (and 313c can start wagging his finger at my language all he wants).

    2. @ MacRaven. My sympathies despite the trite posts.
      I too rode an uncomfortable wave on the old AAPL. It’s gut shredding. In the end I sold mainly because I didn’t like what it was doing to my mind. I would see the stock dip and realize that jagged line represented more lost money than I made in a day, or in a week. Unsettling.
      Now I only gamble on scorpion fights.

      1. Thanks. *sigh*
        Can’t drain the emergency funds, esp. in this economy. You never know when companies will layoff and you have to be prepared to weather the storm with your own funds for who knows how long.

    3. You’re not the only shareholder who got Apple-cored and had to give in. You’re talking about real money people need to live off of. You might be able to buy back in at $350 or less. Why should you just hang in there and get killed while Tim Cook happily snoozes with his head on his mahogany desk. Apple doesn’t care about you, so it’s probably better for you to not care about Apple. You’re less of a traitor to Apple than Apple was a traitor to you. Do not feel guilty. Be pissed-off and consider it to be a lesson learned.

      1. I’m not pissed-off at Apple in any way. They have had to deal with a lot of bad publicity some reports that were out and out lies about them. I sold because I know what it’s like to survive a company that suddenly goes into layoff mode letting hundreds go. I have to make sure I have an emergency cushion. If this was years ago before the economy went South and jobs were secure, I’d have ridden it out. I mostly don’t trust what the media will do to sabotage Apple’s performance or what they will make up next. It’s media like the NY Times and head up their butt Anal-ists I am pissed off at. Not Apple. That’s what is so frustrating. Apple is doing very well in sales of products and computers compared to other companies. But you’d never know it from these idiots reports and they are hurting people like me more than Apple itself.

    4. I set a line in the sand – if it goes down about $100 more, I’m buying more. Hopefully, there’s enough people with the same tactic so it will lift off from there. This plan gives me something to do besides cringe if the price keeps going down. I also set high price limits where I plan to start selling, but they look really distant on the horizon now. The default plan is to just wait around and collect my dividends – I’ve got time and other savings.

      1. After the media and Anal-ists have done their dirty deeds and this crap is over with I will buy back in. I’m not fed up with Apple I’m fed up with the media. And I sold because sadly I don’t think the media is done bashing them yet, getting their sick jollies out of trying to convince the world Apple is doing badly when actual numbers show otherwise. So sittin’ here waiting for the nonsense to stop.

  2. That’s alway a consolation for any long term, serious AAPL investor that has accumulated and invested forever, that traders, short sellers and pundits will never have…

    A long, solid, reliable retirement dividend income from a rock solid company that has always promised long term return.

  3. When it started to drop I wanted to sell at $600 and then wait to see when it bottomed out just so I could buy back in and make my # shares increase.
    My wife said to not fool around and we had a heated discussion but I bought her arguments about the dips and turn-arounds.
    Then I wanted to sell at $500. WE had the same argument.
    Now that is down to $400 and dropping, I decided I was not going to sell….period. At this point, even though it is going down into the $300 area, I do believe it will bounce back.

    Finally, something my wife and I agree on 🙂

  4. I said before that APPL stock has been overvalued. it is now fit into right price. unfortunately, it will go down further. next conference call will make investors disappointed. it will be reach to 50% value down overall very soon.

  5. Nobody here has apologized to the posters the fanboys called trolls for calling Apple overpriced over the last 18 months. Apple had better have a warren of rabbits to pull out of their hat or $400 will not be the bottom.

    1. I’d be willing to apologize to them. I didn’t think Apple was overpriced and I actually thought Amazon was the bubble stock, not Apple. I now see where I was wrong. No particular stock has any real value. It’s only worth what investors are willing to pay for it. Apple is worth practically nothing while Google and Amazon are easily worth far more from an investor’s standpoint. There are no rabbits Apple can pull out to make Apple worth $200 a share more than it is now. Tim Cook appears to be holding an empty hat and it somewhat resembles a dunce cap.

  6. True indeed. Compounding is the most powerful force and often truly not understood.

    But that is if everything else stays statick or does not improve. Thing won’t get worse at least but 20 years is a long time and Apple needs to keep innovation up under all those years. And we will be in iPhone 24S or something.

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