May 3, 2016: Bought 26 shares of AAPL at $94.07 per share.
May 12, 2016: Bought 30 shares of AAPL at $90.20 per share.
Headquartered in Cupertino, California, Apple Inc (NASDAQ:AAPL) designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players. The company also sells a variety of related software, services, peripherals, networking solutions, and third-party digital content. AAPL was founded in 1977.
AAPL has a 5-year streak of consecutive dividend increases. The company pays quarterly dividends of 57¢ per share in the months of February, May, August and November.
I already own 44 shares of AAPL, which I bought in July and August last year at a cost basis of $120.21 and a yield on cost (YoC) of 1.74%. AAPL's stock price has been trending lower, so I'm lowering my cost basis and increasing average YOC with the buys I'm reporting here.
I now own 100 shares of AAPL, with an average YoC of 2.18% and a cost basis of $104.41 per share. The stock closed at $93.98 on 16 May, which means I'm still about 9% underwater with my AAPL holding. Here is a chart showing my buy prices:
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The following table presents updated ratings of AAPL from various sources:
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†combined Value/Growth/Momentum score
According to Tipranks, based on 35 ranked analysts offering 12-month price targets in the last 3 months, the average price target for AAPL is $126.62. Morningstar's fair value estimate is $133, while S&P Capital IQ calculates a fair value of $93.70 and a 12-month price target of $130.
Recently, I started using the fundamental analysis tools provided finbox.io. The average fair value estimate of several models with default settings is $129.00, which implies a 37% upside.
The following F.A.S.T.graphs chart confirms the fair value estimate of AAPL near $130 per share:
Why AAPL?
When I opened my position in AAPL last year, I commented on AAPL's increasingly favorable treatment of shareholders through stock buybacks and dividend payments. Of course, there are many other reasons for buying AAPL, despite some recent concerns following disappointing FQ1 earnings and Apple's guidance for revenue to be down 9-14% year over year in FQ2.
Daniel Sparks lists 15 reasons to be bullish on AAPL. He concludes:
The same author makes a strong case for AAPL as a dividend stock to buy. He sites AAPL's sustained cash-generating power, cash per share, and payout ratio. For every dollar in sales, AAPL generates 24¢ is free cash flow. The company's cash per share accounts for 46% of the stock's value. And, despite returning more than $9 billion to shareholders in stock repurchases and dividends, the company still pays out only 23% of its earnings in the form of dividends.
Street Updates report that 18 Reuters analysts rate AAPL a Buy, while 9 analysts rate the stock a Hold and 19 analysts give the stock an Outperform rating. No analysts give AAPL a Sell or an Underperform rating.
Daniel Sparks lists 15 reasons to be bullish on AAPL. He concludes:
"Expectations for a single quarter of declining revenue is only a single data point among the many reasons Apple looks like an outstanding investment."He also points out that Apple trades at less than 11 times earnings.
The same author makes a strong case for AAPL as a dividend stock to buy. He sites AAPL's sustained cash-generating power, cash per share, and payout ratio. For every dollar in sales, AAPL generates 24¢ is free cash flow. The company's cash per share accounts for 46% of the stock's value. And, despite returning more than $9 billion to shareholders in stock repurchases and dividends, the company still pays out only 23% of its earnings in the form of dividends.
Street Updates report that 18 Reuters analysts rate AAPL a Buy, while 9 analysts rate the stock a Hold and 19 analysts give the stock an Outperform rating. No analysts give AAPL a Sell or an Underperform rating.
56 shares of AAPL adds $127.68 to DivGro's projected annual dividend income. I updated my portfolio to reflect this recent purchase.
What do you think of AAPL as a dividend growth stock? Do you own shares of AAPL or are you planning to buy shares? Please share your thoughts in the comments below.
I am long AAPL and I think that it is one of the most undervalued companies. Look that although share price is at the same level as peak of 2012, then market cap is significantly lower due to buybacks. This means that with the same level of profits EPS should grow :) investors are worried that earnings might decline/be flat in coming years. OK, but with lower number of shares EPS should grow.
ReplyDeleteI am deffinitely an optimist as it comes to AAPL future.
Hi DividendTIME -- thanks for visiting and commenting! The aggressive buyback program is one of the reasons I like AAPL. The company is making billions of dollars a quarter and the current P/E is 10.60. Even if the earnings decline some, I think we'll be fine. Great to be a fellow shareholder!
DeleteBest of luck
FerdiS
I have been collecting dividends from the moment they announced,i will keep adding few more shares via drip to Max my position.
ReplyDeleteThanks for visiting and commenting, desidividend! Best of luck with your shares and adding more!
DeleteTake care,
FerdiS
AAPL is really making the rounds among our fellow dividend bloggers. I guess it's a good time to buy while prices are deflated. I still don't own AAPL nor plan to jump on board but I can see why many are. With all that cash and trading at a very nice valuation I can see the allure.
ReplyDeleteYou're right, I've seen several dividend bloggers buy shares of AAPL recently. As mentioned, I like AAPL and especially at these prices... and the P/E of 10.60.
DeleteTake care and thanks for visiting!
Great buy Ferdi. I've been long AAPL for a long-time. Don't believe all of the doomsday hype around this company. Worst case, Apple has so much money that they can pay dividends for many years.
ReplyDeleteThanks, Investment Hunting... I agree with you, more than $200 billion in cash, and earnings of several billion dollars a quarter. The company is not going away!
DeleteThanks for sharing Ferdis. Long AAPL myself. I also have 100 shares now and will max at 250 shares. I think long term, we'll be fine.
ReplyDeleteKeep it up , you're doing awesome. Cheers bud.
Great to be a fellow shareholder! For the time-being, I'll stay at 100 shares. I have many other stocks that I can add to... (my AAPL position is now 4 times the size of some of my other positions).
DeleteThanks for visiting and commenting, and take care!
Nice buy, I think Apple are really going to go back up when the iPhone 7 - they seem to go up in hurdles, the iPhone S seems to be a less good year and then the new numbered phone makes it good again.
ReplyDeleteThere are other products which they should drive new sales too, the TV, iCar, etc.
Nice buy,
Tristan
Hi Tristan -- thanks for visiting and commenting. I hope you're right about the iPhone 7 -- it would be interesting to see what new products AAPL can leverage to drive up sales. The driverless car is a few years away, I think, and we've been waiting a long time for a real TV killer app. Nevertheless, AAPL is still doing great!
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