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Over the last few years there has been no better example of a tech growth company than Apple (NASDAQ:AAPL). Apple's revenues and earnings have soared in the past few years, as seen in the following table (revenues are in billions of dollars, earnings per share are actual numbers).

AppleFY 2010FY 2011FY 2012*FY 2013*
Revenues$65.23$108.25$161.82$195.99
Growth52.02%65.96%49.49%21.12%
Earnings$15.41$27.68$46.88$54.11
Growth141.16%79.62%69.36%15.42%

*Projected

Apple still has plenty of growth ahead of it, as it continues to provide new and innovative products. Apple has just started to tap the immense Chinese market for iPhones, and the expected launch of Apple TV could provide the next leg of growth for the name. But at the same time, Apple is also entering a new stage. Back in March, Apple announced it would start paying a dividend and repurchasing some shares. There is a new class of investors that will be entering the name soon, and that means Apple's days as a total growth investment are lessening. Apple is going to be a growth and income combination name going forward, and that makes the stock even more attractive.

As some people may not know, Apple used to pay a dividend. Really, I'm not kidding -- just check out the history here. But in 1995 the dividend went away. Intel (NASDAQ:INTC) started paying a dividend in 1996, and has one of the largest yields right now in big-cap tech land, at 3.34%. After the tech bubble, we started to see an increase in large tech names paying out dividends as growth slowed and investors wanted something in return. Microsoft (NASDAQ:MSFT) began paying a dividend in 2003, and is now yielding 2.62% (with a dividend increase expected later this year). Just in the past few years we've seen Cisco Systems (NASDAQ:CSCO) start a dividend, which currently is yielding slightly more than Apple would. Also, just last week we saw computer giant Dell (NASDAQ:DELL) announce a dividend, something investors have been wanting for years. Dell's dividend will start soon as well, probably around the same time as the one from Apple.

Apple announced in March that starting in its fiscal fourth quarter, which begins on July 1, it would pay a $2.65 quarterly dividend. That amounts to $10.60 a year, and based on Thursday's intraday price of $584.18, works out to an annual yield of 1.81%. Now that is a respectable yield to start out at, but to accumulate more shares you are going to need a lot more stock. Because Apple trades at such a high price, over $587 per share, you need a lot of money in Apple to get extra shares. What do I mean? Well, think of it this way: If you collect your dividends and you want to put the money back into Apple, you would need slightly more than 55 shares, collecting the dividends for a year (ignoring tax implications) to buy another share. Although 55 shares doesn't seem like much, you are talking about more than $32,000 in actual stock. That's a lot. If you want to buy another share after each quarterly dividend, you need four times that amount, or roughly $130,000. The following table shows how you need a lot more of Apple stock to get extra shares, while in other names, you don't need as much.

StockAAPLMSFTDELLINTCCSCO
Quarterly$128,780$4,651$1,848$3,230$3,651
Yearly$32,195$1,163$462$808$913

Yes, if you hold just $462 worth of Dell currently, you can pick up an extra share each year from the dividends. Even Microsoft, which you need more than $1,160 of to get an extra share each year, seems rather low when you compare it to Apple. What does that mean? Well, it means that you won't see too many "average" shareholders reinvesting their dividends in Apple, not at first anyway. The large institutions will be able to plow their proceeds back into the stock, but unless you have a lot of dough in the name, you aren't going to be accumulating extra shares from the dividend anytime soon. A new breed of investors will pile into this name to receive the dividends, but they will probably be pocketing the cash instead of reinvesting it, for the first few quarters anyway.

Apple has decided to give investors a portion of its money because, frankly, the company doesn't need it. Just in the past three quarters alone, Apple's cash and investments pile has grown from $76 billion to more than $110 billion. By the end of its fiscal year, ending in September, that number could be at $125 billion or more. Apple has more than enough money on hand to fund its daily operations and continue to create innovative products. Shareholders asked for this, and they are getting what they deserve. Apple will also be repurchasing some shares, but it is not a true buyback. I analyzed what's really occurring back when the original announcement was made.

Apple has just launched a new round of products, but it has to be careful. In fact, there is one example where I think Apple may be outpricing itself. One of the new MacBook Pros with Retina display starts at $2,799. Upgrade a few pieces in it, and you are talking about a laptop that can cost $4,000, $5,000, or even more. Yes, you are going to get a high quality product, but that is a huge investment for a laptop. Just think about one of Apple's greatest consumer bases, the college student/young adult group. For most college students, a $1,000 laptop from Dell or another company would probably suffice. My university had about two dozen computer labs, meaning you didn't need a laptop for that much. A $3,000 difference on a laptop for a student is a huge deal, as you are probably talking about five to seven semesters worth of books there. Apple is known for its premium products, but it has to be sure not to price its products at levels where consumers pass on buying them.

I'm not saying Apple as a growth investment is dead. There is plenty of growth ahead. However, starting next quarter when Apple begins paying out quarterly dividends, a new class of investors are going to buy this name -- and they are income investors. A 1.8% yield is a good start for a high-tech name, and there is even a possibility that it could raise it if it feels its should. Remember, about two-thirds of Apple's cash and investments are held outside the United States, so to bring that money back into the country would cost billions in taxes. That means a dividend raise is unlikely, but anything is possible. For now, its share purchase plan is just to cover executive option dilution, so it won't be reducing the number of outstanding shares. But should the company's cash pile continue to rise as fast as it is currently, Apple will increase its dividend and is likely to start reducing the share count, another positive for investors.

Apple's stock still has a lot of room to run, and I would wait for the next round of analyst fear to buy the name. The average analyst target of $713 stands nearly $130 above current levels, so there is plenty of room for profit. Apple is entering a new phase in the company's history, and that is a positive in my view. Apple investors will start to focus on the income stream that the company will provide in addition to the growth that is to come.

Source: Apple Shifting To Growth/Income Combo