After its January swoon and miserable earnings report, Apple Inc. (AAPL) stock is now down about 17% in the past year. It’s been hard for shareholders to watch AAPL stock fall while high-growth tech rivals Alphabet Inc (GOOGL, GOOG), Amazon.com, Inc. (AMZN) andNetflix, Inc. (NFLX) have all logged 35-90% gains during the same stretch.
Apple’s under-performance can be particularly frustrating considering the $200 billion-plus in cash that the company has on its balance sheet.
Outgrowing Growth
One of the downsides to AAPL’s overwhelming success in recent decades is that the company has grown to be the largest public company in the world. Even though the stock is well off its all-time highs, Apple’s market cap is still more than half a trillion dollars. It’s unfair for investors to expect a company that size to compete with the types of growth rates that companies the size ofSalesforce.com, Inc. (CRM) ($47 billion market cap) or Netflix ($39 billion market cap) can generate.
Sharing The Wealth
However, when companies can’t rely on huge growth to lure investors, capital return is often the next best thing. In Q4 of 2015 alone, AAPL spent $17 billion on capital return, $14 billion in open market share buybacks and $3 billion in dividend payments. Last quarter, it returned another $9 billion to AAPL stock owners. After first implementing a dividend back in 2012, Apple has aggressively increased its annual dividend each year since and is now paying a 2.1% yield.
For shareholders, the fact that the company is swimming in cash, the stock has under-performed peers and Apple’s dividend yield remains below the S&P 500’s average of 2.3% makes for a frustrating situation. But just how much of a dividend could AAPL theoretically afford?
Double Down on Apple’s Dividend
The most important metric when it comes to assessing the safety of a company’s dividend is…
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