Here’s why Apple is my # 1 dividend paying stock for the next 20 years
There is little doubt Apple (NASDAQ: AAPL) has become one of the top performing stocks over the past decade. It was also the first US public company in history to achieve a market capitalization of $ 1,000 billion. Yet despite all the company’s accolades, the coming decade could be even brighter, especially on the dividend front.
In the Dividend Stock Hour broadcast on fool live on October 29, Fool.com contributor Danny Vena explains why Apple is its top dividend pick for decades to come.
Danny Vena: I might be surprised to learn this emphasizing my investment process differently from Jason’s. Mine are going to be a bit more growth oriented, like I said earlier. I would say one of my biggest dividend payers over the next 20 years will be Apple. I think Apple has almost a billion devices. He has a loyal following. Warren Buffett is a big fan of Apple’s dividend. In fact, he said, he owns about 5% of Apple. He would love to own 100%.
I think the fact that Apple has shown in the last decade has doubled the payout in the last decade. I think you might see that payout double, if not more than that over the next decade, just because Apple is making so much money. It revolves around the services part of the company.
I’ll shoot this Apple graphic here for a minute. Because I think it’s worth seeing how strong Apple can be from here. Right now, Apple’s payout ratio is only 24% of its revenue and about 20% of its cash. Apple is solid. If you look at its dividend yield right now, that dividend yield is low – it’s 0.5%. But why is this? Well, the reason is that over the past decade Apple’s stock has gone up almost 1000%.
Now, while I don’t expect that kind of stock price appreciation over the next decade, I think the dividend will outpace stock price appreciation in the coming year. I think Apple is probably my # 1 choice for the next 20 years.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.