Discover why we think Apple is a great value & growth investment & why Warren Buffett loves apple. Analysis of Apple’s dividend yield, history & payout. Should you buy apple stock now?
Apple Dividend History
Apple (NASDAQ: AAPL) has one of the longest and most interesting dividend histories in Silicon Valley.
The beloved computer giant has paid dividends off and on since 1987. More importantly, Apple has historically delivered very high payouts.
Apple paid its first dividend on 15 June 1987. Back then, shareholders received a 6¢ payout. That dividend would be 13¢ in 2018 dollars – when adjusted for inflation.
The latest Apple dividend was 73¢ paid on November 15, 2018. Interestingly, this is actually the second Apple dividend; the original Apple dividend ended in 1995 and did not resume until 2012.
However, there is a lot for investors to like in the new Apple dividend. For instance, Apple shareholders received a 1.72% dividend yield, a $2.92 annualized payout, and a payout ratio of 24.8% on December 11, 2018. Those figures represent five years of dividend growth.
Apple’s Pre 2000 Dividend History
Analysts record five years of dividend growth because Apple stopped paying a dividend for nearly 14 years.
The first Apple dividend began in June 1987 and ran through December 1995. The last payment of that dividend was 12¢ (worth 20¢ in 2018 with compound inflation) on 15 December 1995.
Apple paid its old dividend regularly every quarter for over eight years. That dividend doubled in value during its lifetime.
Apple ended the original dividend when the company ran into trouble in the mid-1990s. The dividend did not return until after Steve Jobs’ historic rebuilding of the brand was complete.
The New Apple Dividend History & Payouts – Post-2012
The new Apple dividend began on 16 August 2012 with a payout of $2.65. Not surprisingly, that payment attracted a lot of media attention.
The company pays the new dividend quarterly and increased it to $3.05 on 23 April 2013. The payout grew to $2.39 on 12 May 2014.
The dividend payout took a drastic cut when the stock was split by a ratio of seven-to-one on 9 June 2014. The next payout was 47¢, paid on 14 August 2014.
The good news for investors is Apple has paid the dividend each quarter since 2014. Better yet, investors still received a very handsome dividend after the stock split.
Is Apple a Good Dividend Stock?
Therefore, Apple became a reliable dividend stock in 2012 and has remained so ever since. Additionally, history shows Apple investors can count on reliable dividend growth.
The 47¢ dividend grew by 5¢ to 52¢ on 14 May 2015. Another 5¢ increase occurred on 12 May 2016 when the payout increased to 57¢. The dividend payment grew to 63¢ on 15 May 2017, another 5¢ increase.
To add icing to the cake, the dividend increase doubled to 10¢ in 2018. Apple made a 73¢ dividend payment on 17 May 2018. The 73¢ payouts were repeated on August 16, 2018, and November 15, 2018.
Hence, the reliability of Apple’s dividend is not in doubt. Under these circumstances, Apple has moved from a risky tech stock to a reliable value investment.
These dividends justify Apple fans’ faith in their company’s stock. Long-term Apple shareholders are being rewarded for their faith in the company.
[Related Article: The Best Stock Screeners To Find Dividend & Value Stocks]
Is Apple Inc. a Good Growth Stock?
Here you can see our 5-year stock chart of the stock price growth of Apple Inc. Recent history shows Apple’s explosive growth, and it is the darling of technology stock investors. Use the chart to compare Apple vs. Microsofts meteoric stock price growth.
Apple is also still considered to be King of the FAANG Stocks.
Why Warren Buffett Loves Apple’s Dividend?
Naturally, Apple has gained many new fans in recent years. The most intriguing of those fans is Warren Buffett.
Berkshire Hathaway (NYSE: BRK.B) bought another 12.4 million shares of Apple during the 2nd Quarter 2018. Therefore, Berkshire’s Apple stake increased to $46.6 billion on 30 June 2018, Marketwatch reported. Berkshire Hathaway is now Apple’s second-largest stockholder.
Buffett bought Apple because he loves receiving dividends. Berkshire Hathaway will receive a $90.52 million quarterly payout on the 12.4 million shares recently purchased.
However, the Oracle of Omaha famously hates paying dividends. Berkshire Hathaway (NYSE: BRK.A) has not paid a dividend since the 1960s.
Is Apple a Good Value Investment?
Buffett’s interest will convince many observers that Apple is a value investment. The financial numbers justify the value hypothesis for Apple.
For instance, Apple records a gross profit of $38.816 billion on revues of $62.9 billion for the 3rd Quarter of 2018. Notably, that gave Apple a gross margin of 38.29% for the 3rd Quarter 2018.
The numbers show Apple is making a lot of money from its technology sales. For example, Apple records an operating income of $16.118 billion and a net income of $14.125 billion for the 3rd Quarter of 2018.
Moreover, Apple is experiencing an impressive amount of growth. In particular, Apple’s revenues grew at a rate of 19.63% during the 3rd Quarter of 2018. For the record, Apple reported revenues of $53.265 billion in June 2018 and $62.9 billion in revenues in September 2018.
Download a Free Apple Stock Research Report From Stock Rover
Why Buffett Considers Apple a Value Investment
Apple has a lot of resources to pay dividends from. The company reported $31.971 billion in cash and equivalents and $70.970 billion in cash and short-term investments on 30 June 2018.
These numbers show why Buffett has fallen in love with Apple. The iPhone maker is now a cash-rich company. That cash is being shared with investors in the form of dividends.
Apple is not a classic value investment because of its high stock price. Apple shares were trading at $210.24 on 16 August 2018. Despite that, Buffett obviously considers it a value investment because of all the cash.
Apple is Generating a Lot of Cash
Not surprisingly, Apple is generating a lot of cash from those revenues. To demonstrate, Apple recorded an operating cash flow of $19.523 billion on September 29, 2018. Additionally, Apple reports a free cash flow of $16.482 billion for the same day.
Under those circumstances, Apple has a lot of money in the money. For example, Apple reported $25.913 billion in cash and equivalents on September 29, 2018. Apple also records $40.388 billion in short-term investments on the same day.
Thus, Apple had $66.301 billion in cash and equivalents on September 29, 2018. Obviously, that gives Apple a lot of money to pay out in dividends.
Why Buffett Considers Apple a Value Investment
These numbers show why Buffett has fallen in love with Apple. The iPhone maker is a cash-rich company.
Moreover, Apple now offers investors a lower stock price. Notably, Apple was trading at $168.48 a share on December 11, 2018. Apple was trading at $232.07 a share as recently as October 3, 2018.
Hence, Apple is a valuable investment with an unstable stock price and a stable dividend. Thus, investors like Buffett, who are willing to ignore the market fluctuation scan, make money from Apple.
Is Apple a Business Your Idiot Nephew Could Run?
Another reason why Buffett likes Apple is its simple business model. In fact, Apple is a consumer products company with a business based on a few popular brands.
Buffett likes simplicity because there is less that can go wrong with a simple business. Famously, Buffett likes to describe a good business as one “your idiot nephew” could run.
In other words, a business that takes no special training, experience, or knowledge to operate. Moreover, the basic business model at such a company is not affected by most management decisions.
The financial numbers show that Apple could have such a business. To explain, Apple manufactures products that are literally selling themselves.
The most important of those products is the iPhone. The iPhone is one of the most successful products in history.
Around 216.76 million iPhones were sold in the 2017 fiscal year, Statista calculated. Apple only sold around 270,000 iPhones during the earliest period of sales in 1st Quarter 2007.
The iPhone sales fluctuate dramatically; 77.32 million iPhones were sold in 1st Quarter 2018, that number fell to 41.3 million in 3rd Quarter 2018, Statista reported. The fluctuations expose the risks in Apple’s business.
Hence, all Tim Cook needs to do to make money is to release a new iPhone. Marketing and advertising are not needed because there are vast numbers of people willing to pay money for any new product with an Apple logo on it.
Apple Dividend Payouts 2014 to 2018
| Payout Date | Dividend $ | Type |
| 16-Aug-18 | $0.73 | Regular Cash |
| 17-May-18 | $0.73 | Regular Cash |
| 15-Feb-18 | $0.63 | Regular Cash |
| 16-Nov-17 | $0.63 | Regular Cash |
| 17-Aug-17 | $0.63 | Regular Cash |
| 18-May-17 | $0.63 | Regular Cash |
| 16-Feb-17 | $0.57 | Regular Cash |
| 10-Nov-16 | $0.57 | Regular Cash |
| 11-Aug-16 | $0.57 | Regular Cash |
| 11-Feb-16 | $0.52 | Regular Cash |
| 12-Nov-15 | $0.52 | Regular Cash |
| 13-Aug-15 | $0.52 | Regular Cash |
| 14-May-15 | $0.52 | Regular Cash |
| 12-Feb-15 | $0.47 | Regular Cash |
| 13-Nov-14 | $0.47 | Regular Cash |
| 14-Aug-14 | $0.47 | Regular Cash |
How Good Is Apple’s Business?
Apple is a consumer products company with a business based on a few popular brands.
The most important of those brands is the iPhone. The iPhone is one of the most successful products in history.
Apple is the biggest, most successful and iconic business of the 21st Century with fanatical customers who love and trust it.
Around 216.76 million iPhones were sold in the 2017 fiscal year, Statista calculated. Apple only sold around 270,000 iPhones during the earliest period of sales in 1st Quarter 2007.
The iPhone sales fluctuate dramatically; 77.32 million iPhones were sold in 1st Quarter 2018, that number fell to 41.3 million in 3rd Quarter 2018, Statista reported. The fluctuations expose the risks in Apple’s business.
Apple is also in such an authoritative position it is even considering manufacturing its own chips, which might have an impact on Intel. In fact, Apple is making a play to try to move into NVIDIA’s space by producing its own graphics processing units (GPU)
Is Apple Recession-Proof?
However, dependence on consumer products makes Apple very vulnerable to economic and market conditions. Apple’s business model is designed for people with high disposable income.
Therefore, Apple should slip during economic downturns. On the other hand, Apple sales increased six-fold during the Great Economic Meltdown of 2007-2009.
Apple sold 1.12 million iPhones during 4th Quarter 2007, and 6.89 million during 4th Quarter 2008, Statista estimated. The iPhone sales exploded during the greatest economic crisis in modern times.
The iPhone sales data will convince people that an important portion of Apple’s business is resistant to economic downturns. Therefore, Apple’s dividend might be safe even in economic downturns.
Is Buffett Betting Against the Market with Apple?
Skeptics will wonder if Buffett is loading up on Apple stock because he wants to keep the cash rolling in during a bear market. Every dividend investor needs to consider that hypothesis.
Importantly, some observers think nearly half the stocks in America’s S&P 500 are already in a bear market. For instance, Reuters’ Noel Randewich estimates 47% of the S&P 500 stocks were down 20% from their 52-week highs on December 10, 2018.
In particular, Randewich notes Apple’s share price fell by 27% between October and December 2018. Conversely, Apple’s revenues and income grew during the 3rd Quarter of 2018.
Apple is a Buffett Value Investment
This could be an indication of another classic Buffett value investing strategy; betting against the market. To clarify, Buffett likes to buy and hold moneymaking companies during times of market turbulence.
Notably, Berkshire Hathaway (NYSE: BRK.B) has maintained large holdings in American Express (NYSE: AXP) since the 1960s. Berkshire Hathaway actually owned 17% of American Express in October 2018, CNBC estimates.
Buffett understands that companies like American Express and Apple still make money for investors despite their stock prices. In particular, such companies will still pay dividends when the stock prices fall.
Apple is both a good dividend stock and a classic value investment. Under these circumstances, Apple could be a good dividend stock to hold if America is facing a bear market.
Is Now a Good Time to Buy Apple Stock?
In terms of Market Timing for a Stock purchase, you can look at Technical Analysis Provided by TradingView. This is a summary of the Stock Chart Indicators Relative Strength, Stochastic, CCI, ADI, Momentum, MACD, and a suite of Simple and Exponential Moving Averages.
