EC Is Apple Stock For Dividend Investors?

Ah, yes. The stock everyone LOVES to talk about and the stock that has been driving everyone to buy, regardless of the share price. Apple (AAPL) has been a stock that new and current investors have been buying throughout 2020. Apple stock has had a share price skyrocket and then, ultimately the stock split at the end of August. The Apple stock split allowed the price to look better-priced for other investors who may have thought it “looked” too expensive.

We are dividend investors here and dividend investors in this community. The question of – is Apple Stock one for a dividend investor’s portfolio? – has occurred more frequently than not. I decided to run through and perform an Apple stock analysis to formulate my response to that question!

I know, we spent many years not talking about Apple stock, but I thought – given the increase in the press about investors picking up shares relentlessly, that I had to put an article out from a dividend investor’s standpoint.

As a dividend investor, the questions we ask are – is the dividend safe? Does Apple increase the dividend at a pace that matches their dividend yield? Is Apple’s stock fundamentally undervalued? Can Apple provide a steady stream of passive income, in the form of dividend income, on your pursuit of financial freedom?

Those are the key & critical questions that dividend investors ponder. However, maybe those are just my thoughts and questions I have when debating about adding Apple stock to my dividend portfolio, or, any stock for that matter.

Apple stock dividend metrics

This wouldn’t be a deep dive without putting Apple (AAPL). For those that do not know the critical dividend metrics we use, we keep it simple with 3 dividend stock metrics:

1.) Price to Earnings Ratio: Below the industry / S&P 500 on average and/or competitors.

2.) Dividend Payout Ratio: The sweet spot range is 40%-60%, preferring to see the ratio below 60%.

3.) Dividend Growth: We want to see a history of dividend growth, with a dividend growth rate that coincides with the dividend yield the stock currently produces.

Price to Earnings Ratio

In fact, analysts are projecting earnings in 2021 of $3.87, a steep increase of 20% from the expected earnings in 2020. Analysts are definitely confident in how Apple (AAPL) can surge in earnings in a post-pandemic time period. Further, their product line of MacBooks, iPads, Apple watches, and the significant expected growth in Apple TV+ is pushing those expectations through the roof.

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Disclaimer: I do not recommend any decision to the reader or any user, please consult your own research. Thank you.

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Comments

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Moon Kil Woong 4 days ago Contributor's comment

No they have no strong history of dividend payout and no guarantee if they fall on hard times or a bad tech cycle they will keep their dividends flowing. Yes their dividend is good here, but don't rely on it.

William K. 4 days ago Member's comment

This article is both interesting and educational and in addition a reminder that buying apple stock years ago would have been a very smart move.