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Apple Dividends: Reverend Cook, Please Increase The Dividend By 25%

Jul. 12, 2017 6:55 AM ETApple Inc. (AAPL)77 Comments
Arturo Neto, CFA profile picture
Arturo Neto, CFA


  • Apple's dividend growth has been phenomenal and yet it might still be on the conservative side.
  • Apple generates enough cash to substantially increase its dividend without so much as a hiccup.
  • An appropriate dividend payout ratio should be 34% - a 25% increase to the estimated 2017 dividend.

I get asked all the time what I think about investing in Apple (NASDAQ:AAPL) stock. However, I think the people that ask simply want to hear confirmation for a decision they have already made. In fact, I had a client at a previous employer who after hearing my recommendation to reduce his Apple exposure from 40% to 20% of his portfolio due to concentration risk, defiantly said,

Apple is my religion and I am a devoted follower

So that was that. I knew he would never reduce his exposure to Apple, but for compliance reasons and because I was obligated to give my advice regardless of whether the client would act on it or not, I kept repeating my recommendation every time we talked or exchanged emails. It’s not that I didn’t like Apple, I just didn’t think it should be 40% of someone’s portfolio.

The last time I wrote an article about Apple on Seeking Alpha was July 2014, when I highlighted its high but decreasing return on equity as a potential harbinger of a price decline. I highlighted a few ways the company can reverse its downward trend: increase margins through either price increases or cost cuts, return cash to shareholders, or continue to increase leverage.

The stock proceeded to climb another 42% through May 13 th, 2016 before coming all the way back down to the levels it was trading at when I wrote the article. But since then, it has popped again , appreciating over 62% for an annualized return of over 17% since my article was published.

It was a wild ride, to say the least, but I missed the boat, you might say. But it was more because I stopped paying attention to the stock and not because I was wrong in my assessment. It turns out, Apple did increase

This article was written by

Arturo Neto, CFA profile picture
I have been involved in financial services for almost 30 years. When I first started focusing on financial planning and money management it was out of a first-hand experience watching friends and family having to work well past retirement age because they hadn't saved or invested enough. Eventually I landed in a family office worth hundreds of millions of dollars where I was able to see 'how the other half lived' so to speak. I now operate a wealth advisory firm and publish articles on Seeking Alpha for DIY investors that prefer to manage their own money. As publisher of The Income Strategist, a premium subscription service on SA, my goal is to guide investors on how best to generate income from their investments. The service includes several income portfolios with different strategies that members can use independently or in combination. As part of the service, I also collaborate with other SA authors to provide broader and deeper coverage of investing. In addition to being a Chartered Financial Analyst, I am also a Certified Private Wealth Advisor and have an MBA from the Darden Graduate School of Business at the University of Virginia. I also hold a Master of Science in Finance and Bachelors in Finance from Florida International University. Having lived in Miami almost my entire life, my family and I relocated to Nashville, Tennessee in May 2018 in the pursuit of a better lifestyle and southern hospitality. If you're ever in the area, please do reach out. I'm happy to be teaming up with the following expert analyst contributors:1. Dilantha De Silva2. The Belgian Dentist

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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