“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.”
Read more in the full article here.