“With Apple stock trading a whopping 67% higher than it was 12 months ago and management gearing up to report second-quarter earnings next Monday, some investors might be tempted to sell shares and take their gains,” Daniel Sparks writes for The Motley Fool. “But shareholders should think carefully before they do so. While it might be difficult to comprehend how a company with a market capitalization over $730 billion could still be undervalued, there are concrete reasons to hold on to this winner for the long haul.”
“While Apple’s capital return program expires later this year, in the company’s first-quarter earnings CEO Tim Cook said Apple would announce an update to the program when it reports second-quarter results,” Sparks writes. “Indeed, Apple’s updated capital return program could be at least as aggressive as its predecessor.”
“Since Apple began paying dividends, the tech giant has increased its payout two times, by about 15% in 2013 and by 8% in 2014,” Sparks writes. “Apple can easily afford to continue to increase its dividend by 8% annually. But with shares trading significantly higher in 2015 than they did in 2013 and 2014, stock repurchases are less enticing and management might opt to be more aggressive with its dividend increase in 2015 than it was last year.”
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