Recent Buy

buyAlways feels good to get the first stock purchase of the month in, doesn’t it?

Every dollar working on my behalf means I’ll have to work that much less in the future. And since money doesn’t sleep, get tired, or get sick – unlike me – I’d rather my money work for me rather than the other way around.

As I recently discussed in my last watch list article, there are a few specific stocks that I’ll likely be focusing my capital on over the course of March. And this first purchase just happened to be on that list.

I purchased 5 shares of Apple Inc. (AAPL) on 4/7/15 for $127.02 per share.

Overview

Apple Inc. primarily designs, manufactures, and markets a variety of mobile communication and media devices, personal computers, and digital music players, in addition to selling related software, services, peripherals, networking solutions, and third-party digital content.

Some of their product offerings include the iPhone, iPad, Mac, iPod, Apple TV, and the Apple Watch. Their software solutions include the iOS, OS X operating systems, and the company offers cloud service via iCloud.

Net sales by operating segment were as follows for fiscal year 2014: Americas, 36%; Europe, 22%; Greater China, 16%; Retail, 12%; Japan, 8%; and Rest of Asia Pacific, 6%.

Net sales by product type for FY 2014 were: iPhone, 56%; iPad, 17%; Mac, 13%; iTunes, Software and Services, 10%; Accessories, 3%; and iPod, 1%.

Apple is currently the world’s largest publicly traded company by market capitalization.

Fundamentals

As you might expect before even reading this article, the company has excellent quantitative fundamentals.

I’m going to review the last 10 years of growth across the top and bottom lines, which will give us an idea of the long-term picture here. But I’ll also show what the more recent numbers look like as well to see how much Apple might be slowing down as it’s now a $700+ billion company.

Revenue was $13.931 billion in fiscal year 2005. The company grew that to $182.795 billion in FY 2014. That’s a compound annual growth rate of 33.11% over the last ten years, which is phenomenal. However, the last five years of data might be more representative of what to expect moving forward due to the maturity of the company and the markets it serves. The five-year CAGR for revenue is still a mighty impressive 29.39%.

EPS grew from $0.22 to $6.45 over the last decade, which is a CAGR of 45.55%. Again, stunning. The five-year CAGR is also impressive, at 31.45%.

Apple’s bottom line was helped recently by extensive share repurchases. The company announced a $10 billion buyback in 2012 that was subsequently increased to $60 billion in April 2013, then again to $90 billion in April 2014. Since 2012, the outstanding share count has been reduced approximately 7.5% from ~6.6 billion to ~6.1 billion.

These numbers can’t persist forever, and more recent growth over just the last couple fiscal years has slowed markedly. However, upper-single-digit or low-double-digit EPS growth seems extremely reasonable. S&P Capital IQ is actually predicting that EPS will grow at a 12% compound annual rate over the next three years, which assumes continued aggressive share buybacks.

Now, as a pretty hardcore dividend growth investor, one of my primary concerns is whether or not a company pays a dividend, the size of the payout, how much and how often they increase that dividend, and whether or not the dividend is sustainable.

In these terms, Apple passes with mostly flying colors.

My one issue with the stock is the length of the dividend growth streak. They’ve increased their dividend every year since initiating a dividend back in 2012. Steve Jobs, the co-founder and former CEO, was staunchly opposed to paying a dividend, which is why the company didn’t pay one until after his death in 2011. So I’m giving Apple the benefit of the doubt here.

Since they started paying a dividend in 2012, however, they’ve increased it significantly. The company increased the dividend by 15.1% in 2013 and 7.9% in 2014. In addition, they’re due up for another dividend raise later this month. So I’m very excited to see what that’ll be.

The yield right now, at just 1.5%, is low. However, they maintain a payout ratio of just 25.3% and there’s that aforementioned upcoming dividend raise which could quickly boost the yield.

One area of Apple’s strength is its incredible balance sheet. The long-term debt equity ratio is very low, at 0.26. And it was until FY 2013 that they had any long-term debt at all, after deciding to fund some of the buyback and dividend activities with cheap debt due to a large portion of its cash behind held overseas. The interest coverage ratio is well above 100, so there are no concerns here.

Notably, Apple’s total cash, cash equivalents, and marketable securities adds up to over $150 billion. For perspective, that means their cash hoard is about 50% larger than the entire market cap of McDonald’s Corporation (MCD)!

Profitability across the board is also spectacular – the company’s posted net margin that’s averaged 23.08% over the last five years and return on equity that’s averaged 37.16%. These numbers compare very well not only against the industry, but all businesses in general. Moreover, both have been noticeably improving over the course of the last decade.

Qualitative Aspects

Apple has been an absolute dominant company over the last decade with the launching of a number of high-quality products that people love to buy, like the iPhone and iPad. And Apple focuses on a number of areas that the competition historically hasn’t nailed down quite right, namely design and ease of use. The design of their hardware, software, and even points of sale (both retail stores and the website) have all set the standard by which other products and companies are judged.

This creates a sense of goodwill which translates into the incredible ecosystem that Apple has built. When you buy an iPhone, you’re not just buying a smartphone. You’re buying a piece of hardware that’s integrated with Apple’s software – this integration and standard familiarization across the product line, by the way, allows the company to charge a premium for their products. And that entire package – hardware and software – is designed to work best within the ecosystem that Apple offers, which includes third-party applications that number well over 1 million.

And that goodwill translates into repeat customers both in terms of buying the same product again, but also in terms of buying more products that offer the same user experience and quality. Notably, Apple maintains by far the highest customer loyalty percentages among smartphone manufactures, with an 87% loyalty rate in US and Europe.

Meanwhile, Apple still has tremendous growth potential yet ahead – especially in regards to iPhone sales – which is perhaps surprising for a company of their size. And since the iPhone is by far the company’s most important product, that is where much of the opportunity still lies.

First, the share of smartphones as a percentage of total handsets will surely grow over the next decade. Thus, the company has a great chance at grabbing a significant portion of these new customers.

Second, the company has an opportunity to grow its market share. Though its two largest operating segments – Americas and Europe – are mature markets, they have huge opportunities in front of them in emerging markets. And recent data shows they grew their market share in China to an all-time high of 27.6%. Looking at the global market, Apple has a 19.7% worldwide market share of smartphones, which leaves an incredible amount of room for growth.

Third, they have a massive cash pile which can be used opportunistically for major acquisitions or bolt-ons (which the company seems to prefer).

Fourth, they have the ability to harness the power of their ecosystem via new products. The Apple Watch is a great example of this.

Risks

AAPL is, of course, not without risks. I’ll highlight a few.

Primarily, the company faces intense competition across its entire spectrum of product lines, especially in the smartphone and tablet space.

In addition, Apple’s products are typically sold at a premium to their competitors. This leads to the high margins quoted above, but it could hurt them in emerging markets where price is a major factor.

Meanwhile, the tech space changes quickly. If the company isn’t able to keep pace and offer the best tech with the best experience, it could harm their ability to not only sell products, but also the ability to continue selling at a premium.

Lastly, they face currency risks like any other international company.

Valuation

The stock trades hands for a P/E ratio of 16.92, which is about 10% higher than the five-year average of 15.4. However, this is still much lower than the broader market, and we are talking about a high-quality company here.

I valued shares using a two-stage dividend discount model analysis with a 10% discount rate. I used an initial dividend growth rate of 15% for years 1-10 and a terminal dividend growth rate of 7%. This seems reasonable considering the low payout ratio, flexible balance sheet, and strong underlying profit growth. The DDM analysis gives me a fair value of $128.79.

It appears I picked up shares right at about fair value, which I’m okay with. I’ve never been opposed to buying a high-quality company at fair value, though I prefer to buy as cheap as possible, when possible.

Conclusion

This is a massive company. Surprisingly, however, I actually think there are still growth opportunities, especially in emerging markets like China. Growing market share there bodes well. Meanwhile, the company has an excellent brand image that focuses on design, quality, ease of use, an ecosystem that stretches across the spectrum of products, and a premium experience. Customers are obviously willing to pay up for that based on the margins, pricing, and loyalty numbers.

I’ve long been hesitant to invest in the tech sector. However, my portfolio as a whole is quite large, and my exposure to tech is still quite low (even after this purchase). That’ll likely remain so. Perhaps most importantly, though, is that I view Apple as just as much a consumer products company as a tech company. All companies nowadays have a significant amount of exposure to tech in some fashion. Though I don’t have an interest in investing in technology companies that fall outside my circle of competence, Apple’s core product lineup is fairly simple to understand in terms of what they offer, how they make money, and why that ability to make money will likely persist.

I don’t think the stock is a steal here, but it does appear to be roughly fairly valued. However, an upcoming dividend hike and the anticipated launch of the Apple Watch could be a catalyst to move shares higher, meaning this might be an opportunity.

As a final note, I had a remaining free trade with my brokerage, so there was no commission here. That’s why the purchase was as small as it is. It also gives me a chance to initiate a position and scale in. Meanwhile, I still have plenty of capital leftover for purchases elsewhere this month.

This purchase adds $9.40 to my annual dividend income, based on the current $0.47 quarterly dividend.

I’m going to include current valuation opinions from other analysts below, which I use to concentrate my reasonable valuation estimate:

Morningstar rates AAPL as a 3/5 star value, with a fair value estimate of $120.00.

S&P Capital IQ rates AAPL as a 3/5 star Hold, with a fair value calculation of $156.40.

I’ll update my Freedom Fund in early May to reflect this recent purchase.

Full Disclosure: Long AAPL and MCD.

What do you think of AAPL here? Like its prospects? What do you think of the fundamentals? 

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

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132 Comments

  1. Apple are such a massive company, with huge sales and profits. Their cash pile is absolutely vast – I wonder who is charge of managing that! What do you think about the new Watch? It’ll be interesting to see where the company goes in the next 5 years or so and if they’re still managing to stay on top. But, another dividend payment in your pocket, which is better than in theirs!

  2. Hey Jason,

    What do you think the reason is for Apple maintaining such a high cash amount? I remember hearing Bill Gates say about MSFT’s cash, that he wanted to be able to pay everyone on payroll for the next 6 months, even if the company stopped earning anything tomorrow. However, I have never heard any reason for Apple doing the same.

    A good purchase I think, although I’m not a huge fan of Apple, but I do like cash-rich companies.

    Cheers

  3. I don’t really understand the draw of AAPL products because I’d much rather get a similar phone for half the price. But it’s hard to argue that there’s plenty of people out there that will buy anything from AAPL. I own a little bit in my Loyal3 account but it’s not much. I think that AAPL should do well over the long term because the ecosystem and ability to run everything on your phone, tablet, computer, tv is pretty intriguing. There’s no searching for a million different devices/remotes when you can do it with any of their products. The DG should be solid and I think AAPL is a solid choice for tech exposure. My biggest concern is that they have to continually come up with new products to get real growth.

  4. Great buy Jason. Awesome company. I’m still shooting myself for not buying it back when my wife told me to. Would be sitting on a 100 percent gain. Sigh. Carl Icahn says its an easy 200$ stock. I believe him. Keep up the great work my friends take care. You’re doing wonderful.

  5. Good buy. Like a lot of people, I’ve been thinking about APPL for a while and wish I had bought it a long time ago. This fits nicely with your other “Stage 3” stocks, and I think the growth on their dividend will stay high for several years. Keep up the good work.

  6. Its about time! AAPL is my biggest holding. I am gald to see it do so much in buybacks and start the dividend. Even though it signifies a shift, a company that big can’t be all growth.

  7. Congrats on the AAPL purchase! is definitely one of my favorite stocks of all time (after Google). I think this company will continue to go places! I sold my shares (for a nice profit) some years ago shortly after the genius Steve Jobs passed away because there was a lot of uncertainty around the future of the company. However, the new CEO has successfully shown he can keep this company successful and there are tons of exciting plans for the future. So, I opened a new position in January of this year and I couldn’t be happier. Welcome to the apple shareholders club 🙂

  8. Welcome to Apple! My favorite company with favorite products and my favorite stock! Been a holder since my first iPhone!

  9. This is pretty funny. After I read on your previous posts how AAPL was on your watchlist I decided to look it over and I also bought around 7 shares at 127.90 on April 7.

    Funny coincidence. I’m just starting but really looking forward to the future now, thanks for all your great posts!

  10. Great buy DM! Even though I’m still relatively new to the world of dividend investing, I scooped up Apple as one of my first five stocks I bought. This will totally be a long term investment for me so I’m excited to see what other innovative, game changing products Apple will come up with. Glad to have you in the club. 🙂

    I’m really enjoying on your recent buy posts when you put in the fair value estimate or calculation for the stocks you purchase. Even though price should never be the sole dictator on whether or not I purchase a particular stock, it is always helpful to know whether or not the price I’m paying is reasonably fair. Do you have to have a paid membership to Morningstar and S&P Capital IQ to get this additional feature? I’d love to add it to my own research as I seek out the next dividend stock to purchase.

    Thanks again for always creating such great content. Your site is one that I frequent almost every day.

  11. DM,

    I’m glad to be a fellow shareholder! As many have stated, it would have been great to get in a few years ago when they were taking over the entire phone market. AAPL is the cream of the crop, high margin X high volume = cash cow. They should be able to reward shareholders for years without the growth they have experienced in the past considering the low payout and massive revenues generated. It seems crazy to me that PG, CL, and other staples are selling at a P/E above 20 meanwhile AAPL remains lower than the broader market.

    Best of luck with this position!

    Regards,

  12. Hi Jason,
    Welcome to the AAPL club. I have been a shareholder for a few years now and I am real happy shareholder.
    Any reason why you purchased only 5 shares instead of your usual amount of ~1500 ?

  13. DM,

    Glad to see you as a fellow shareholder now, I have no doubt you will increase your position. Looking forward to their increase next month (I have not seen an announcement yet, but I hope to see it soon).

    Long AAPL and thanks for the analysis.
    – Gremlin

  14. Nicola,

    The Apple Watch is exciting. It’s their first true new product in five years now. But the design, usability, and ecosystem are all there. So I suspect it will do well. 🙂

    Dividends are always better in our pockets than someone else’s!

    Thanks for dropping by.

    Cheers.

  15. M,

    Well, the company just produces a ton of cash flow. Something like $50 billion last fiscal year. So it’s hard not to build up significant amounts of cash, which is why all that pressure was there to start returning it. That culture wasn’t always there, either, which is something I mentioned.

    We’ll see how that gets deployed. They clearly prefer buybacks, but I hope to see a more aggressive dividend policy in the future.

    Take care!

  16. JC,

    “My biggest concern is that they have to continually come up with new products to get real growth.”

    That was initially my thought as well until I looked at the CAGR over the last five years – a period which includes no major new product launches. The Apple Watch is the first truly new product in five years. Meanwhile, the iPhone 6 just broke records. That ecosystem and culture just has a tone of value.

    We’ll see how it goes. I know I’m still rocking my iPhone 3G from years ago, so I can say they build a quality product. 🙂

    Best regards!

  17. Tyler,

    I know how you feel. I thought about picking up shares before the split, but just never did. Can’t win them all. I’ve done well, regardless. And so have you. So many stocks, so little capital. Great to have first world problems. 🙂

    Thanks for the support. Hope all is well!

    Cheers.

  18. TBD,

    I agree. This is definitely a nice “Stage 3” stock. Should provide plenty of growth for a long time to come. I might pick up one more stock in that category, like NKE or SBUX, before I’m all done.

    Excited to see what the next dividend raise looks like. Shouldn’t have to wait too long. 🙂

    Best regards!

  19. Vawt,

    Haha. About time, huh? 🙂

    Yeah, there’s a shift there… but I think it’s a good thing. The company can still obviously achieve solid organic growth, and the buybacks and dividends just add to the possible shareholder return and value. Meanwhile, there’s still a ton of potential, which is surprising for a company so large. I think we’ll do well.

    Best wishes.

  20. Mabel,

    Glad to be in the club! 🙂

    Cook has done really well after taking over. The Apple Watch will say a lot about where the company is going, since it’s the first new product category in five years. Keeping my fingers crossed that it’s a big hit.

    Cheers!

  21. YOLO,

    You’ve done well if you’ve been a shareholder that long. Excellent! 🙂

    The numbers here are outstanding across the board. I’m surprised to see such a large company growing so quickly. The last couple of years have slowed markedly, but they don’t even need massive growth to produce really solid long-term returns and dividend growth. We’ll see how it goes!

    Thanks for dropping by.

    Best regards.

  22. Melissa,

    Thanks so much for the readership and support. Much appreciated!

    The Apple Watch is exciting. The iPhone is still the big story here, but wearables could be a whole new growth category.

    Morningstar premium research is available through their website. The cost is worth it, in my view. And S&P Capital IQ is available through my brokerage, Scottrade. I’ve never looked into it, but I heard once that you can access some (all?) of their information for free directly through their site. You may want to check that out.

    Stay in touch!

    Best regards.

  23. DO,

    Yeah, I agree. Some of those stocks, like CL, just seem to be way overpriced to me right now. I wrote about CL not long ago as one of my “overvalued stocks of the week”. The valuation defies logic.

    I’m actually excited about AAPL’s prospects. The cash flow is just tremendous. Still can’t believe how much cash they have around, though accessing some of it will prove difficult due to it being overseas. Nonetheless, the future bodes well here.

    Best wishes!

  24. DGJ,

    Yeah, I had one remaining free trade and about $500 sitting in the brokerage account. This allowed me to quickly make a purchase without having to really tap new capital. I can scale in later and I still have enough fresh capital for some more stock purchases throughout the month.

    Glad to be a fellow shareholder. Let’s hope that watch launch goes well! 🙂

    Cheers.

  25. Nice Buy DM !

    I think it is still a steal now and that you will make more money on capital appreciation than on dividends.

    Good Luck !

  26. Aspenhawk,

    Let’s hope you’re right. I think AAPL is about fairly priced here, but S&P Capital IQ thinks it’s a steal. I hope they’re right and I’m wrong, but only after I get a chance to build a position out. 🙂

    Thanks for dropping by!

    Best regards.

  27. I have 90 AAPL stocks bought year and half ago at $388 before split. I am hoping for at least 15% dividend hike soon. I am happy with it so far.

  28. Congrats on another fine addition to the Freedom Fund! I really like where this company is going in Tim Cook’s hands. Especially for shareholders 🙂 I think the next major upgrade that will allow AAPL to take over the Asian markets will be making the phones waterproof. From what I’m told, they pretty much expect that in a phone. So much more than that tech will happen in the next few years though and I probably can’t even wrap my head around any of it. The best part is that in case AAPL doesn’t set the next new trend, they’re in a mighty fine position to be able to acquire almost anything they want with that massive cash flow! However I truly have confidence in their ability innovate on their own with all that R&D they do. Great way to work your way into a smaller position to start with too, that’s how I’d like to play it with Loyal3 or something to ease my way in. Always love your recent buy updates, thanks for sharing!

  29. I owned AAPL stock twice in my life. First time was at $40 and sold at 50. Last time was just last year from $58 to $85. I’m thankful I made some money on them, but I should have just held the entire time. I picked a winner but was too dead set on trying to make a quick buck and look to buy the next one. Too much of a short term thinker, but not anymore! I have you and all the other bloggers out there to thank for that.

    The dividend growth investing lifestyle is definitely the right thing for me. Nice purchase DM, hopefully AAPL treats you as well as it did me and more.

    ADD

  30. Welcome to the club, been an Apple shareholder for a while now, wished that we had bought Apple shares earlier. Apple might require a little bit of monitoring to to make sure the company continues its technology technology edge.

  31. First class company, First class stock. As a former owner (and hopefully owning it again at some point in 2015) Great, truly great choice I’m sure it will do well with the rest of your holdings.

    I’ve bought and regularly use a Macbook, iPhones (switch every year-year and half), Apple Tv, iTunes, even bought an IPOD Classic before they were discontinued.

    All I can say is its great all-around. This is the second stock purchase that has me a envious lol (the first being Disney)

  32. Congratulations Jason,

    For once I guessed correctly the buy before getting to the meat of the article. Something about your responses in your watch list article hinted towards AAPL. I just initiated a money transfer to my brokerage and once the cash settles I plan to purchase 14 shares next week. I’m hoping this stock doesn’t catch any pre-earnings hype before I can make my full purchase. The dividend is nothing to write home about (maybe a special dividend will be declared), but it has a strong product line and the Watch which will just add more to the bottom line starting next quarter.

    This month marks the one year anniversary of my first set of stock purchases. I debated between AAPL and GOOG last year. I chose GOOG as it was a company I believe has the potential to create some great technological changes and their was a lot of negative press about the future of AAPL’s growth. Well less than a month later, the pundits were wrong and AAPL has risen dramatically since then. As I enter my second year of stock investing I am more prepared and well versed thanks to you and seeking alpha (from which I discovered your blog through).

    Thank you and here’s to 2015 being very fruitful!

  33. DM,

    Cool purchase and nice to see you knock one off your list. I’m curious on what Apple has in store for their dividend policy, in terms of where they want their payout ratio and how large/small they want to increase that dividend yield. obviously breaking down the growth patterns down from the 10 to 5 year makes more sense, given the maturing phases. I’m curious on how big of a hit the watch will be, knowing Apple – they’ll definitely suck that crowd in and perfect/better the product than the competitors. Excited and anxious to see the results and dividend actions. Moving capital early always is a nice weight off, congrats!

    -Lanny

  34. Cant fault you for buying Apple DM. I just added to my position a couple of weeks ago. We are still in the nascent stage of the dividend growth story – although the company has grown by leaps and bounds. Looking forward to those dividends rolling in.

    Best wishes
    R2R

  35. Hey Jason, just found your blog and I think its great (you’re a great writer to boot)! My question: where’s the best place to look up a company’s payout ratio? I’m having a hard time finding it. Thanks, Chuck

  36. Hi … I am also starting my Dividend Journey to replace my day job Salary. I have been following you from last year.Your Journey is amazing. I am an IT guy .. making more then what you make . But much much poorer than you.

    I appreciate your dedication .. Good luck Sir..

  37. Great buy! This is one of the companies that create amazing products and I love using them. I have also been vested with this company since 2012 and it has done wonders, I took a chance on it early and it has been paying dividends ever since. I only wish I took a chance on it earlier. I see high potential for this company as it has destroyed and separated itself from competition. Awesome buy DM! Welcome to the Apple family!

    Whats next? Maybe upgrade to Macbook? 🙂

    Take care.

  38. Dividend Mantra,

    Great buy with this company. I think Apple is the largest company by market cap. People love their products especially the anti-Windows people. This is a great long term hold.

  39. Nice to see some more Tech added to your portfolio. And you kept with the frugalness, you bought 5 stocks in Apple rather than buying an iPad 😛

  40. AJ,

    That’s awesome! You’ve done well there with Apple. I came very close to buying not long before the split was announced. It popped not long thereafter and I kind of moved on. But I think there’s still a lot of long-term potential here, which is ultimately what I’m after.

    Glad to be a fellow shareholder! 🙂

    Cheers.

  41. Ryan,

    Yeah, you’re exactly right there. If there’s an exciting new company out there that happens to catch the attention of Apple, they certainly have the wherewithal to pounce. 🙂

    I’m still a little leery around tech in general, which is partially the reason behind the smaller purchase. This gives me a chance to feel it out and scale in. But, like I mentioned in the article, it’s really more of a consumer products company than anything else.

    Thanks for dropping by. Have a great weekend!

    Best wishes.

  42. ADD,

    It’s all about the long-term. Takes a little while for that mindset to “click”, but when it does… look out. 🙂

    Have a great weekend!

    Cheers.

  43. Tawcan,

    We always wish we would have bought more of the successful companies and less of the other ones. Hindsight is 20/20, right? 🙂

    We’ll see how it goes, but I’m surprised by the potential.

    Thanks for dropping by!

    Best regards.

  44. Sunny,

    I can definitely vouch for their quality, still using my iPhone 3G that I bought like seven years ago. 🙂

    Maybe, just maybe, my next laptop will be a MacBook. Love to support the products that I have a business interest in. I’d have to find a hell of a deal, though.

    Thanks for the support. Have a great weekend!

    Best wishes.

  45. TDM,

    Ha. I guess I dropped some hints on the AAPL move. 🙂

    Glad we’re on the same page here. Would love to have you as a fellow shareholder. The more the portfolio grows, the more I like it. I just don’t know what’s better than a collection of the greatest businesses in the world. Oh, I know! Collecting growing dividends from said businesses!

    Have a great weekend over there.

    Cheers.

  46. Lanny,

    Yep. One more off the list. 🙂

    I’m very curious to see how the Apple Watch does. Less interested in the overall initial sales numbers and more interested in the traction and the reviews. I’m more excited about long-term staying power than a big launch. We’ll see. They rarely make a bad move, and I understand this thing has been in development for some time now. The design is obviously fantastic.

    Either way, another high-quality company in my hands.

    Thanks for dropping in. Hope all is well!

    Best regards.

  47. R2R,

    We’re definitely on the same page here. The dividend growth story is definitely just starting, which is really unique since we’re talking about such a massive company. It’ll be interesting to see how it plays out. 🙂

    Take care!

  48. Chuck,

    Thanks so much. Appreciate the kind words. 🙂

    As far as the payout ratio goes, you can use any number of financial sites to find the TTM EPS. You then simply divide the annual dividend amount by that to get the payout ratio. However, you may also want to check with the respective company’s financial reports just to make sure the numbers are correct.

    My favorite third-party sites are Morningstar and Google Finance.

    Thanks for dropping by!

    Cheers.

  49. DS,

    Thanks for following along! 🙂

    Hey, I was poor when I first started as well. I was worth less than $0. Not a good spot. But we all have to start somewhere. The key is that you’re taking an honest assessment of the situation and you recognize the need for change.

    I’ll continue writing if you keep reading. We’ll get there together!

    Best wishes.

  50. DV,

    Nice! Glad to be a fellow shareholder. Jumping on the train a little late in the game, but there appears to be plenty of choo-choo left. 🙂

    You never know there with the MacBook. Just bought a cheapo laptop earlier in the year. Hoping it lasts a while. But maybe an upgrade down the road!

    Cheers.

  51. IP,

    They definitely have a loyal fan base. The loyalty is through the roof. Glad to collect a little income from that unique relationship.

    I’ll now use my iPhone 3G with pride! 🙂

    Thanks for the support.

    Best regards!

  52. DW,

    That’s funny. I once read an article years ago comparing buying an iPod to Apple stock. The numbers were ridiculous. It obviously highlighted the benefits of being an investor over a consumer. 🙂

    Have a great weekend!

    Cheers.

  53. Great stock, one of the few that should get you not only stellar growth, but also a rapidly growing dividend. As we all know, they’ve got plenty of cash in the bank to pay shareholders.

    I’m obviously bullish, I have too many iproducts and am locked into their ecosystem. No going back… 😉

  54. One of my largest holdings, bought in after the Iphone6 came out – around $100. As a laggard in technology, I’ve personally found that once you get into Apple products you pretty much stay hooked. I think there is a lot of upside – with less than 20% of Iphones being the 6/6+, lots of upgrades yet to come. Plus there is the China expansion, watch, ApplePay, TV potential products, revamp of Itunes, etc.

  55. Congrats on finally getting yourself some AAPL, Jason, it’s been a long time coming 😉

    It may not be selling at much, if any, of a discount these days, but I still think it was a great buy. As you’ve alluded to, I believe that there is still a lot of room for growth for Apple.

    I hope to join the AAPL club myself very soon!

    Cheers

  56. You chose well, I think you will be enjoying healthy dividend increases for many years to come. I was fortunate enough to buy AAPL back when it was beaten down. I knew, of course, that it had not much of a dividend history, but I am glad that I took the risk.

    I am hoping one of these days they’ll be able to channel their cash (via some tax holiday or whatever) and spike the dividend like there’s no tomorrow =).

  57. Yery good buy. I own Apple shares and I will add some more in May. In my opinion this is the best Tech opportunity available in the market. Even that you think you are late you will see, that you will get a good development with this company. OK, 1,5% yield is not the strategy of an dividend growth investor, but Apple will grow the dividend in the neaar future. Apple has some really interesting new plans with Apple Pay, wearables and further development on iPads same as iPhone, or the watch. At the moment you can´t do anything wrong with it. After some years you will get dividends which have much more yield compared to the 1,5% at the moment. You will like this investment.

  58. Hi Jason,

    Congrats on the AAPL purchase!

    We have held AAPL for quite some time now and it has performed very well. I’ll be looking forward to the dividend increase for sure.

    I was concerned about things when Steve Jobs passed, but it seems Tim Cook is doing a very good job. I think he and his staff have some excellent vision that will be good for all of us in the long run.

    I really do not think you can go wrong with this stock.

    Great purchase and I am glad we are fellow shareholders!

    Enjoy your weekend!

    Ray

  59. Welcome to the Apple Club! I wanted to buy last year, kept holding it off, then the split happened and I went “oh crap!” and within a few weeks, I pulled the trigger and bought in around $95/share (I got slightly over 4 shares). About a month later, I doubled my position. The dividends started rolling in. 🙂 The company I work for has recently started doing business with a few Apple products (we boast we are one of the few to do this and that) (and we are by no means a tiny company!), so I thought that that in itself showed faith in Apple’s potential. Coupled with my thoughts about the company, I am just waiting for more cash to come in so I can buy more! I was thinking early May, but then you alerted me to a dividend increase (I’ll need to look into this now), and also there were some comments here wondering if the hype over that could possibly affect & drive up the price even more. Maybe I’ll reconsider and buy in the next couple weeks, instead.

    Thanks for being the inspiration and reason why I bought my first stock last year. 🙂 (Honestly, it reassures me that I made a good move if someone I look up to does similar.)

  60. I’ve only recently started investing in dividend stocks with an eye to growth and FI. For my first purchase I allowed myself to make a single emotional purchase of 1 AAPL share (no commission paid) as I’m a fan-girl. I’ve been learning and reading since then but I’m at a point where I wish I’d purchased a few more, this post only reinforces that! Next month =D

  61. Apple has grown at an unbelievable rate during the last decade. It’s nuts!

    In the current market, there’s a solid case that Apple is fairly to slightly under-valued. That balance sheet also gives significant support to continued capital returns… assuming their products continue to appeal to customers.

    The biggest business downside that I see is a lack of a moat. They seem to have created one, but in tech hardware… product cycles are incredibly short. Anywhere from 1-3 years (close to 1 for phones and maybe 2-3 for other devices like TV, but that’s just a slower product group). What this means is the company can’t really sit on their hands and collect products from great R&D like GE can after they create a great new jet engine or power generator. This is a weakness, but also a strength/opportunity if they execute well… and execute well they have for the last decade.

    The market cap may not budge a ton ahead ahead of the market, but capital returns and market level growth could easily make it a reasonable risk/reward scenario for an investor. Tough that you had to get in at fair value, but I also think the risk is considerably less today than 2 years ago when it was priced for growth and execution. The future upside may be lower, but so is the risk… at least in my view. If I didn’t hold it already, I would likely get in, although I’d be biting my lip knowing it was 20%+ lower in the past year. 🙂

    Glad to see you finally get in. Fear of “tech” is a reasonable viewpoint, but when you find a company that executes and is incredibly responsible with shareholder cash… it’s hard to really be worried about them squandering it.

  62. Haaaaa, I knew you’d buy it! I’m not often in agreement with what you buy, especially concerning valuation. But this time, I feel you’ve made an excellent purchase. I consider AAPL extremely undervalued, with an intrinsic value somewhere around $175. Although it’s had a great run since the split, I feel this entry point is still phenomenal. Great buy, and I hope to see you add more in time.

  63. Welcome to AAPL DM! 🙂 I’m hoping for a double digit dividend raise this month but they tend to focus more on the buyback.

  64. Hey DM!

    In contrast to the majority here I feel that AAPL is not interesting for a “buy and hold dividend orientated investor”. Granted, you will probably sell it with a handsome profit (I guess you will not be able to resist the profitable sell) sometime in the future.

    1,5% is not worth mentioning IMHO … dividend growth rate can not compensate that – again IMHO.

    AAPL is … again IMHO … all about capital appreciation and not about dividends.
    AAPL is speculative not investment – in my eyes — for my portfolio a nogo. I wouldn´t want to start that sort of game.

    Anyway, I followed your hint concerning EMR but today not AAPL, so 50% advice appreciated is a good percentage isn´t it?! ;-))))))

    All the BEST
    Thorsten

  65. FI Fighter,

    Haha. No going back now. 🙂

    I’m definitely interested to see how they use that cash moving forward. They’ve been spending a lot on buybacks, which has made sense as the growth cycles slows down. I hope to see perhaps a bigger dividend moving forward and perhaps some really solid bolt-ons here and there that make a lot of sense for the company. Management has done well here. No reason to assume that won’t continue.

    Thanks for dropping by!

    Cheers.

  66. Jay,

    Definitely a lot of potential here. And it’s quite surprising since we’re talking about what could be the first $1 trillion publicly traded company.

    Excited to see how it goes. And excited to start collecting some iDividends. 🙂

    Glad to be a fellow shareholder. As one of your largest holdings, I’m sure you’re an incredibly happy investor!

    Best wishes.

  67. scott,

    Good call there. You could obviously write a book about Apple and everything it does and offers, but I touched on the major moving parts. As far as I can see, Apple Play is insignificant in terms of revenue generation right now. Could change in the future (I hope so). 🙂

    Cheers!

  68. ZTZ,

    Thanks! 🙂

    Yeah, we’ll see how it goes. It’s just another piece of the puzzle. Doesn’t offer a lot of current income, but if it works out like DIS and V have for me thus far, I’ll be happy. I’ve got those 5%+ yielders in there to make up for these kinds of stocks. Just have to find that mix that works for you.

    Have a great weekend. Thanks for dropping in.

    Cheers.

  69. Spoonman,

    Nice move there. I was really close to buying AAPL back before the split. I think it was like $575 or something at the time. I remember eating lunch at work one day in the lunch room, and CNBC was on. It was all Apple talk (what’s new?) and they were laughing at the $1,000 price calls and stuff. I remember thinking to myself that there was this opportunity at hand, but I just wasn’t as comfortable with the idea of the stock at that time. I regret that now.

    Glad to be a fellow shareholder now, however. And I also hope they’re able to issue a special dividend or something else with that cash that would deliver a lot of immediate value to shareholders. We’ll see. They seem to prefer buybacks by far, though.

    Have a great weekend.

    Best regards!

  70. olli,

    Better late than never, right? 🙂

    I’m excited about Apple’s future. It’ll obviously be nothing like their past 10 or 15 years, but the stock can easily deliver attractive total returns with the business model already in place. I find it unlikely that they won’t continue to print money for years to come.

    You’re right in that there’s not a lot of current income, but that’s what some of my other stocks are for. Meanwhile, a decade or so of strong dividend growth should propel this stock’s ability to generate income within the portfolio.

    Glad to be a fellow shareholder here.

    Thanks for dropping by and sharing your thoughts! 🙂

    Take care.

  71. Nice buy, Jason. I’m a little surprised that you dipped into Tech and chose AAPL with its smallish 1.5% yield. Risks aside, AAPL sits on a tremendous amount of cash. It has a solid foundation for growth, or dividend growth. I like AAPL and have a large investment in another portfolio. So, welcome, fellow shareholder!

  72. I think the watch will be a dud. There hasn’t been much hype about it, and Android watches have been available for a couple of years now. I think its the start of a long decline for apple. They haven’t released a revolutionary product in several years.

  73. Ray,

    Thanks so much!

    A lot of Apple shareholders in the audience. Glad to see that. And glad to be a fellow shareholder with you as well. Five shares isn’t much, but it’s a nice start.

    I agree with you there on Cook. As an outsider looking in, I was kind of curious how things would work out for Cook. Jobs was such a visionary… can’t really replace that. But Cook has done well. If you’re a shareholder, I don’t know how or why you’d be unhappy with the initiatives so far. But the Apple Watch is important as the first real new product launch under Cook’s watch. Excited to see how it goes from the standpoint of how much consumers like it.

    Thanks for stopping by. Have a great weekend!

    Best wishes.

  74. Jamie,

    It’s great to be part of the club. I’d ask if we get cookies or some kind of secret handshake or something, but I think a quarterly check will more than suffice. 🙂

    Great to hear that your company is buying products from Apple. That sounds exciting not just from your perspective as an employee, but also as a shareholder. Win-win!

    The valuation right now seems about fair, but I could also see the price moving up quickly. If the watch does well and good news keeps pumping out of China, the stock could rise quite quickly. Couple that with a likely dividend increase at the end of the month, and I felt good about buying these shares at this particular moment.

    Appreciate all the support. And glad to be along for the ride with you!

    Cheers.

  75. Claire,

    Warning: Buying dividend stocks and receiving/reinvesting dividends is addictive. May lead to repeat stock purchases. 🙂

    Buying shares in companies you’re familiar with that produce the products and/or services that you lovingly buy/use is a great way to start investing. Be careful, however, as it’s a slippery slope.

    Thanks for stopping by. Enjoy the ride!

    Take care.

  76. Ravi,

    Right. The valuation today provides a lot of downside protection. You’re not paying 30 or 40 times earnings or whatever, so Apple doesn’t really need to grow much from here to provide very attractive total returns. The expectations are set to where the market is basically saying that the company will only grow at a 7% or 8% rate from here. If they do, great. But there’s some room for upside there, I think.

    As far as fear of tech goes, I still have that. But, really, this business model is a lot easier for me to understand than, say, even IBM’s. It’s mainly a consumer products company. There’s certainly a lot of tech there, but there’s tech in a lot of consumer products these days. And I can understand how Apple makes money. I can look at the watch, at a phone, or at a computer and get it. Now, I know there’s a lot more behind the scenes that I don’t really understand. But I feel comfortable enough to invest with confidence.

    “If I didn’t hold it already, I would likely get in, although I’d be biting my lip knowing it was 20%+ lower in the past year.”

    That line of thought gets the best of us. I know I’ve missed out on a lot of stocks because I didn’t want to buy after big run up. V and BDX come to mind. Yet they kept on running and running. I’ve decided to largely ignore pricing charts and what not by focusing only on what’s still in front of me. Can’t make money on what’s already happened. 🙂

    Cheers!

  77. DD,

    That’s a bold call, but I hope you’re right. Well, I hope you’re right about $175 only after I get the position up to where I want it to be. Wouldn’t mind owning another 10 or 15 shares here. 🙂

    I can definitely see the stock only moving up aggressively from here. Depends in a big way on how the watch goes. In addition, the report at the end of the month is something to look forward to. Wouldn’t mind seeing the quarterly dividend move up to $0.54.

    Thanks for dropping by!

    Cheers.

  78. fiveoh,

    Glad to be in the club. I hear this is where all the cool kids hang out. 🙂

    I’m with you. Hoping to see the quarterly dividend move up to around $0.54, but they definitely focus more on buying back shares. Still almost 6 billion shares out there, so there’s plenty for the picking. But, yeah, definitely hope to see that dividend get boosted handsomely. We’ll see what happens here pretty soon.

    Cheers!

  79. Thorsten,

    Well, there’s a lot of stocks out there. All kinds of stocks for different investors. Apple certainly isn’t for everyone. 🙂

    However, I wouldn’t agree that Apple is a speculative investment. Some of my best investments thus far, in terms of capital appreciation and dividend growth, have been stocks that display similar fundamentals and qualitative advantages to Apple. But the low yield certainly leaves some investors on the sidelines. Really depends on your goals and your time frame. But I’m 32 years old, so I have plenty of time to let Apple do their thing.

    Thanks for stopping by. Have a great weekend!

    Best regards.

  80. Ferdi,

    Thanks for the kind welcome. A lot of Apple shareholders out there. Shouldn’t surprise me with almost six billion shares floating around. Someone owns them. 🙂

    The balance sheet is a tremendous area of strength and opportunity here. They’ve been great at not squandering it thus far. Strategic buybacks, some bolt-ons, and maybe a special dividend here and there makes sense for Apple with the business model already in place. We’ll see how it goes!

    Thanks for dropping by.

    Cheers!

  81. Adam,

    We’ll see how it goes. I don’t think Apple (or its shareholders) is hitching the wagon to the success of the watch. The iPhone is still really the big story here, as I mentioned. But it could be a whole new growth area for them. I remember hearing the same thing about the iPhone 6 – copying competitors with the bigger model, nothing really new – but it killed. 🙂

    Take care.

  82. Awesome move Jason! you don’t even have to worry about what you miss by not buying it sooner, you will soon be rewarded 😉 I see AAPL becoming another MSFT in the future in term of dividend payment.

  83. Adam,

    I can’t imagine being anything less than super happy with that decision! 🙂

    Nice buy there. I’m a little late on this one, which is strange considering the dividend growth streak. But I think there’s still a lot of potential here. Even with little core growth, Apple could deliver stellar income growth for many years to come.

    Cheers!

  84. Mike,

    Yeah, I agree with you there. I can definitely see Apple becoming a huge dividend payer down the road. They certainly have the financial wherewithal to make that happen. 🙂

    Hard to bet against a company producing $50 billion a year in FCF and $150 billion on the balance sheet. Really incredible numbers.

    Have a great weekend!

    Best regards.

  85. Really glad to read this post Jason. You made a great choice, and NO, it is not too late. Apple is truly one of a kind. It’s a money printing machine that will continue to print for years to come. The fears people talk about now are the same fears they talked about when I began buying in 2011. I’m just shy of 3000 shares and feel buying today makes just as much sense as buying back then.

  86. Yeah I hate to say it but Apple has a lot of fan boys, and that is why they are so popular. They are one of the largest companies by valuation, but a company such as Microsoft is 10x the size and provides 10x the services and products…For example, what powers the largest companies in the world? Microsoft Windows Servers, Microsoft Windows 7/8.1, Microsoft Active Directory, Microsoft System Center 2012, Microsoft Sharepoint, Microsoft Office, Microsoft Dynamics…not Apple products, employees only use Apple products to connect the webmail/contacts on their iPhone/iPad to the Microsoft Exchange Server.

    People like Apple because Apple is considered hip and cool (And Microsoft stumbled late to the game with mobile product). My wife has an iPhone 6 (I have a Google Nexus 4). I also have an iPhone 4S from my work. To be honest, other than the size of the phone, I can’t tell much difference about them because they both run iOS 8. Maybe that isn’t a bad thing to have that much uniformity. I do like that Apple supports their products for 3 years, whereas Android phones are manufacturer specific and rarely get the latest version of Android unless it’s a premium product (Google Nexus, Samsung).

    What I am saying though, is that Apple has been successful because it was an innovative company in the consumer market, but they seem to be running out of ideas. I’m not sure why Apple doesn’t attempt to gain some business market share by coming out with a business operating system and products.

  87. Jason,

    Great company!! I’ve been a shareholder for a bit and an Apple product fan for twice as long. Quality company that has been delivering quality products for years that most likely won’t change anytime soon. I’ve watched Apple go from a very selective consumer core (MACS) to mainstream via anything “i” product. No telling where this company will go in the future considering how huge IOE/IOT/M2M will grow in the not to distant future. Big fan of AAPL and would buy more if I was not at my allocated portfolio percentage.

    Raymond.

  88. Cj,

    AAPL definitely prints cash. The FCF is unbelievable.

    There are always detractors for just about any company out there. I’d rather listen to the numbers.

    “I’m just shy of 3000 shares and feel buying today makes just as much sense as buying back then.”

    Wanna trade positions?? 🙂

    Nice buy over there. Glad to be a fellow shareholder. I’ll never have that kind of position in the company, but I’ll try to rock out with 15 or 20 at some point here.

    Thanks for stopping by. Appreciate the insight.

    Best wishes.

  89. APPL is currently 13% of my portfolio, so no arguments from me on the purchase 🙂
    Welcome to the club!
    It was 15%. I have been adding to other postions to bring it down.
    Should be getting a divi raise in a few weeks.

  90. Adam,

    “but a company such as Microsoft is 10x the size and provides 10x the services and products…”

    Hyperbole is fun, but I like to work with facts and real numbers. There is no world in which Microsoft (a company I admire) is “10x the size” of Apple. Apple’s revenue is more than twice that of Microsoft’s and their net income is also almost twice as much. We value companies based on things like real earnings power and cash flow, not on how many services and products they provide. I could provide 1,000,000 products. But if they all make $1 dollar a piece, I’m not going very far.

    Cheers!

  91. Raymond,

    I can definitely speak to the quality of the iPhone 3G firsthand… still using the one I bought in 2008! 🙂

    Happy to be a fellow shareholder here. Looking forward to seeing how the watch does and what kind of dividend raise management might have in store. This might be one of those situations where “I wish I had bought more”, like with DIS and V.

    Thanks for dropping by. Let’s hope they continue to serve us well.

    Cheers!

  92. Rob,

    I can tell someone likes AAPL. 🙂

    Very much looking forward to that dividend raise here later in the month. Hoping to see the quarterly dividend boosted to $0.54.

    Glad to be a fellow shareholder with you. I doubt I’ll ever have a major stake in the company (relative to my own portfolio), and certainly nowhere near 15% of the portfolio, but definitely wouldn’t mind another 10 or 15 shares from here.

    Let’s keep our fingers crossed for a healthy dividend raise!

    Take care.

  93. Jason,
    I have been long AAPL since it was $50 (split adjusted) and the iPad was announced. My oldest daughter and her fiance were talking about how cool it would be if there was something bigger than a smart phone but smaller than a laptop. The iPad seemed to be exactly what they were describing, so I jumped in. Those 25 shares are now 178 after the 7:1 split and reinvested dividends, and is my wife and my 4th largest holding. I’m not sure how long we will hold the stock since tech can change quicker than the Tigers can pitch a shut-out, but we are content holding for the time being.
    Be blessed,
    KeithX

  94. Jason, adding to my comment from yesterday. If you’re looking into buying a MacBook Pro or any of the others in the product line. look into Micro Center http://www.micocenter.com they sell computers, and other things at a discount to market.

    However, as much as like my own macbook, I can honestly say you’re not getting any bang for your buck. You can buy a comparable PC laptop for half the price. I bought it simply because, i wanted an Apple laptop, it has no bang for my buck. Don’t regret it, but from a position of maximizing value I would think hard on the purchase. At the end of the day to treat yourself every now and then i guess

  95. I really enjoy your blog. I have started to invest in dividend paying stocks. I snagged my first one a few weeks ago in Phillip Morris. I was wondering what your thoughts were on AMT?

  96. Thank you for sharing your analysis on the company. I look forward to reading each of your posts and this is no exception.

    I am long on the company since about 2 years ago, and it’s done great for me so far. I do feel that their chief innovator is still giving them gifts even after passing away, but I have two fears about the company. One is that even with new products in the pipeline they won’t be able to “move the needle” enough to make a noticeable difference to their bottom line. The other is that they may not execute on some of the new products they have coming out as well as previous successes. My opinion of why the company was so successful to begin with is the product ideas were great, but more importantly they were executed to perfection.

    I have no intention of selling and really hope for a bright bright future, but being such a large company just makes me uneasy.

  97. KeithX,

    Nice move there. That’s very Lynchesque – jumping on an investment after seeing it do the right things at the consumer level. 🙂

    So glad to hear they’ve served you really well thus far. I’m also not sure if I’d feel real comfortable if AAPL were a major position for me, but there’s really not much to dislike here across the board from a fundamental standpoint. I’m sure you’re looking forward to that next dividend raise, which should be announced later this month. More cash flow, baby!

    Have a great weekend.

    Best regards!

  98. Sunny,

    Thanks for the recommendation. If/when I decide to grab a MacBook, I’ll definitely check it out. 🙂

    Hopefully, I won’t have need for a computer for some time. Grabbed my cheapo laptop earlier this year and hoping it lasts for at least three or four years.

    Cheers!

  99. Jason,

    Thanks so much. Glad you enjoy the blog thus far. I pour my heart into it, so it’s so wonderful that readers like yourself appreciate it. 🙂

    I don’t follow AMT at all, so it’s not a stock I’m real familiar with. Looks like the P/E ratio is near 50. I’d be careful with that one.

    Cheers!

  100. Tvak,

    Thanks so much. Appreciate the readership!

    I hear you there on moving the needle. I figured they would have slowed down significantly years ago, but they just continue to crush it. Keep in mind that they don’t need to really move that revenue needle all that much from here to really produce solid total returns. They’ve put themselves in such a position where the core business is so attractive and huge that just avoiding a contraction in revenue should allow them to continue to produce a ton of cash flow which can flow down to shareholders.

    Thanks for stopping by. Glad to be a fellow shareholder with you.

    Take care.

  101. Not my first pick from the bunch that you mentioned in your April picks article but I can understand the allure of wanting to add this name to your portfolio. I would have guessed WPC as your first pick and I like EMR from your list. Of course, as you mentioned there’s no denying the cult/fanboy status of AAPL and its cash horde. It’s definitely a name that has some great future growth potential along with the ability to potentially acquire new/interesting tech. Thanks for sharing.

  102. DM,

    Took ya long enough to join the club 🙂 Seriously though, I believe APPL is one of the best young dividends out there that should be paying and raising for many, many years to come barring an apocalyptic event.

    Best,
    DWC

  103. DH,

    Yeah, Apple is just one of many great high-quality stocks out there. I have a feeling that they’ll eventually rack up an impressive track record for dividend growth, following their already incredibly impressive track record for capital gains. Their cash generation and financial wherewithal puts them in pretty rare company, so I’m glad to finally have a stake in something like that. We’ll see how it goes!

    Cheers.

  104. DWC,

    Haha. I wish I would have been ready for AAPL sometime earlier on in my investment career, but that time has finally come. I’ve built up the dividend income to a sizable passive cash flow stream, which allows me to be a bit more flexible in terms of what I take on. I agree with you on the stock. Should pay growing dividends for many, many years to come. Now I get to be excited about Apple news! 🙂

    Thanks for dropping by.

    Best regards.

  105. DM,

    Although I do not own any Apple products, they have such a wide moat and loyal customer base, that I don’t see them slowing down anytime soon. Awesome purchase as usual!

    Regards,
    F2R30

  106. My sentiment about this purchase of yours is exactly the same as when I saw that you initiated a position in DIS:

    ABOUT. DAMN. TIME. 🙂

    Although I’m leery about tech stocks in general, I purchased in Loyal3 (pre-split) what ended up becoming a share of AAPL, just to sate the fangirl in me. I’ve been riding the rocket that is their stock price ever since!

    Welcome to the AAPL club!

  107. I am curious how the watch will sell. I kind of see it as a product that people won’t want to be caught wearing/owning…sort of the ultimate fan boy product in a way. That is the vibe I get from it..I never really understood the motivation for its development. In a way, it’s a kind of product that could render the smartphone obsolete. Somewhat counterproductive to me, but what do I know… I hope it does well because I am a shareholder as well. I’ve been wrong about apple products in the past, I hope I am wrong again.

  108. F2R30,

    As a frugalist, our home is obviously not loaded up with Apple products. But I’m a very impressed customer, still rocking my iPhone 3G. Great brand, great products, and an incredibly loyal fan/customer base. Happy to own a chunk of this company here. 🙂

    Thanks for dropping by!

    Best wishes.

  109. Seraph,

    Haha. Yeah, so many stocks out there. Takes some time to build up that collection on my kind of income, especially when we’re talking $1,400 or so a pop. But I’m glad to finally come around to this one. Easing into it, but I have some room here to scale the position as I go. 🙂

    Glad to be a fellow shareholder. Keeping my fingers crossed for a big dividend raise here later this month.

    Thanks for dropping by!

    Best wishes.

  110. Chris,

    Yeah, I’m interested in seeing how the watch does as well. It’s really all speculation right now until it’s on the market for a while and we can see what the numbers look like. Either way, this company’s story is really the iPhone. But, if the watch does well, that could be a whole new growth category.

    I initially wasn’t sure how the iPad would sell. I suppose I have the perspective of someone quite frugal, and a phone does much of what the iPad does. I didn’t know how much people would be willing to pay up for a bigger screen. But there you go. 🙂

    Thanks for dropping by!

    Best regards.

  111. Hi Dm,

    Seems like a solid buy at this price. I don’t own them myself but I have 20ish of them in the portfolio that I manage for my mum.

    Have a good weekend.

    Cheers,
    G

  112. I don’t know if I should like this buy. On the one hand the company is really solid and fair valued. But will Apple be so successful in the future? The types of smartphones, watches and tablets are not so special and because of this there are plenty of other competitors with the same types of products. Can they hold their margins steady or will they be forced to lower their prices?

    I think a good example for this difficult market is Nokia. 20 years ago this company was one of the biggest electronic companies and the largest producer of mobile phones. Now it is just a part of microsoft.

    The sells of the smart watches could be really interesting. Will people buy a thing which is expensive and not really necessary just because it is from apple? I don’t really know, but I know I wouldn’t buy one. Ok I live very frugal so I’m not the normal customer. 😛

    How large will this position get in your portfolio?

  113. Geblin,

    I’m guessing your mom has done well in that case. I regret not buying earlier on, but that regret is limited. It’s just one of those stocks that I really couldn’t make a compelling case for a couple of years ago for a variety of reasons. As it is, it’s tough for me to buy Apple even right now because of the relatively short dividend growth history. But the numbers and recent management decisions seem to indicate that the dividend should grow at a very attractive rate from here on out. We’ll see. 🙂

    Cheers!

  114. mephisto,

    Yeah, change – and the odds of it happening (100%) – is one of the major downsides to investing in tech. Tech changes fast, so you have to assume that any company you’re investing in will stay ahead of that curve. I think Blackberry is an even better example of where tech moved on without a company. They just didn’t adapt to a changing world.

    And that’s why I don’t invest heavily in technology in general or any one tech firm in particular. As far as the weighting goes, I wouldn’t invest any heavier than I have in IBM. My idea of investing in tech is placing a few small and strategic bets across some of the most successful and large firms out there.

    Thanks for sharing your thoughts and perspective!

    Best regards.

  115. I know we discussed it in another post, but I really think its a great company that you will look back at fondly in 10 years and will be extremely glad you purchased it! Great job, Jason!

  116. Chris,

    Thanks. I certainly hope we’re both right. The potential, especially considering their massive size, is fantastic. The yield’s a bit low, but I’m okay with that as long as they can keep the big dividend raises coming. And with all that cash flow and cash on the balance sheet, I think they will. 🙂

    Best regards!

  117. Cj,

    Not much to really dislike there. I didn’t listen to the call, but I did read most of the transcript. Not often you see a company beat by $2 billion on the revenue side. Pretty crazy stuff. As we continue to see, they’re primarily an iPhone company, and it’s good to be in the iPhone business. The dividend raise is nice, as is the big boost in the buyback. I’m pretty happy. I’m likely to increase my position in May.

    Cheers!

  118. Well, Jason!

    In contrast to my sceptic lines here I joined the club … a little (1,2%) IMHO “speculation” in my portfolio.

    WHY?

    Additionally to your analysis plus the “you-cannot-ignore-the-massive-quality-like-RoE-Margins-etc.”
    I read somewhere in the www that

    “AAPL is the one share I lose sleep because I do not own it”.

    Hit it accurately for me.

    Best wishes
    Thorsten

  119. Thorsten,

    Glad to have you on board as a fellow shareholder. 🙂

    I regret missing out on the Apple train, as I’m sure many do. It’s been a great investment over the last decade, but I see no reason it can’t continue to be a great investment in the future. The most recent quarter was really outstanding, and growth in China is encouraging. I think we’ll do well here.

    Best regards!

  120. DM,

    AAPL has dropped quite some in the recent days. Would average down on recent price drop?

  121. denver,

    I’m probably not going to average down on Apple. I’m pretty happy with the position size and the price I paid. I’ve discussed before that I only want very small exposure to tech in general, strategically spread out among a few small investments in some of the true cash cows of the industry. And that’s kind of where I am right now. Furthermore, Apple is a bit of a stretch for me with the yield. If it were to drop significantly from here, however, I might be inclined to add a bit. But it’s not even 10% below my cost basis, so I’m not interested in really making any moves here. Maybe another $5/share drop. We’ll see. 🙂

    If I weren’t invested in Apple, though, I’d be on it here.

    Cheers!

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