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Apple: Extraordinary Longevity

Mar. 08, 2018 11:52 AM ETApple Inc. (AAPL)83 Comments
Dalton Hicks profile picture
Dalton Hicks


  • Evaluating qualitative aspects of Apple's business model that will continue to drive their success.
  • A discounted cash flow analysis evaluating Apple's potential FY22 year-end intrinsic value.
  • Evaluating Apple's dividend potential in correlation to its discounted cash flow analysis.


Apple, Inc. (NASDAQ:AAPL) provides an exceptional long-term investment opportunity for any investment portfolio. They have built a brand that is internationally recognized and has an extraordinarily loyal customer base. Their proprietary product line combined with their customer loyalty will increase sales among their product line from their phones to their watches. Apple has demonstrated the ability to implement solid price increases among their product line and still produce consistent sales. In addition, Apple’s cloud services has become a consistent and growing segment of their revenue stream. Apple still has an attractive quantitative evaluation, even at current market prices. With a consistently growing dividend, attractive quantitative analysis, and promising prospects, Apple is a great stock to add to anyone’s portfolio.

Qualitative Analysis:

The power of a brand is something that is hard to grasp. Apple has the most valuable brand of any publicly traded company on the planet according to Forbes, valued at $170B per its 2017 ranking. One of the most important, if not the most important, factor when investing in a company for the long-term, is investing in a company with an impenetrable moat. I think it’s safe to say that Apple has built quite a moat around their company with their extraordinary brand. Powerful brands such as Apple or Coca-Cola create customer loyalty. Genuine customer loyalty leads to customer base growth and recurring sales. I believe the power of Apple’s brand is capable of continuously generating a larger customer base and increasing revenue, dividends, and thus, shareholder equity. Apple’s brand and moat is the driving factor behind this analysis and why I believe they have the necessary tools to be an innovative leader in the tech industry for years to come.

(Image Source.)

While the proprietary nature behind Apple and their products could be viewed as a

This article was written by

Dalton Hicks profile picture
My investment analysis is focused on identifying well-established companies trading appreciably under intrinsic value. I believe in deep value, long-term investments. My objective is to generate exceptional returns from well-known, less volatile blue chips. I am a mortgage loan officer, and the head of a limited investment partnership. I hope my contributions and analysis can provide valuable insight to fellow investors.

Analyst’s Disclosure: I am/we are long AAPL. 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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Comments (83)

Can you speak more on gilead
Yes interested not so much in current high yield but dividend growth potential /continued financial growth ..thanks
Dalton Hicks profile picture
This is harder for me to do honestly. I will give you a few high dividend yielding stocks that I own, however, you have to keep in mind the levels I purchased them at. For example I bought Macy's at around $19 per share with a yield close to 8%. If you read my first article I'm not the biggest fan of Amazon. I believe they don't offer the investor any genuine intrinsic value. They don't earn a lot, low equity per share, and no dividends. All while being a fundamental terror of an investment they have exploded and hurt a lot of good companies, one of them being Macy's.

Another principle to keep in mind when investing in companies for the long term, is evaluating what your forward dividend yield could be. While I may not be able to give you a list of great companies that have 5%+ yields right now, the companies we've already discussed could turn out being high yielding dividend investments many years down the road.

With that being said, a few I currently own that are pretty high yielding dividend currently are Macy's (M), Tallgrass Energy Partner's (TEP), International Business Machines (IBM), and Gilead Sciences (GILD). The yields in the companies I listed range from 3%-9%. I try to focus on companies that I believe still have room to grow in terms of providing generous capital gain as well as great potential for a high forward looking dividend yield.
Great read-dalton could you share in order a group of your currently favorite dividend stocks and why. Keep up the great work-wonderful info
I paid 451 a share before split that was the beginning for me 70 shares wow what a rude time to pay us a little more my grand kids are going to have a picnic I have 11of them and3grand baby’s my wife and I want to go Vegas one more time and I won’t care if we lose go aapl go pats go sox
I don’t remember it going to 202 I own aapl since a week before the 7-1 split its high as far as I know was 181 or so it’s higher now let the money come and share a little with us!!!!!!
12 Mar. 2018
If you slightly round the end of FY22 to be 5 years out, the $295 high end price and the dividend increase suggested only work out to a 10% annualized increase, each. That's a pretty save low end guess, but I'd go with 12% increases on the low end, and 15% on the high end. While 20% might happen, the probability of that happening is a lot lower unless AAPL's P/E range changes dramatically or Apple manages to hit a new out of the park home run in that time.

But no reason to be greedy. Even 12% over 5 years brings AAPL from $180 today to $317 then. Up it to an annualized 15% gain, and the stock price doubles in 5 years, to $362.

If the dividend annualized increase kept up too, that would just be frosting on the cake....but increasing the dividend at the same rate as the stock increases also means that the percentage would be the same 1.4% it is now.

While annualized 10%, 12% or 15% increases over the next 5 years are fun to look at, IMO the probability is high of that being very unsmooth, with 15-30% increases some years but a -20% year and -10% year mixed in there, likely pairing up with a similar market downturn though history has shows AAPL doesn't always wait for such pullbacks to start it's own. Just like AAPL's last 5-6 years.
GLENN the troll go back to your cave. You are a manipulator and don’t ever provide information that is accurate. Your cherrypicking of data is known. You must have an agenda.
FredHSTein profile picture
Pretend that AAPL is a share in a real estate deal. The rent keeps going up faster than the costs. Plus APPL is already discounted 10%.
FredHSTein profile picture
Apple will likely increase their payout ratio slightly as prevailing interest rates increase. They will balance the need to avoid setting the precedent of large annual divvy rate increases with the need to have competitive yield in a higher interest rate economy. Don't expect radical changes. Don't expect Apple to increase divvy just because AAPL's price gains impact yield.
If the current div returns 105% of my cost basis per share, how long have I owned AAPL ?
FredHSTein profile picture
Bingo. Buy now for high yield in the future. At $180, the stock is discounted 10%.
Great article and analysis. I look forward to my dividend doubling within 7 years or so, assuming Apple keeps hiking it at least 10% per year as it has been doing.
How about an answer it’s quiet all of. Sudden
Where is all that money going I want some
What is happening with the repatriation Mandy 15billion be gasification some for buybacks to increase stock price?????and some for div increase and some for r@ d come on let’s hear about Allan ???
Glen Rivard profile picture
It is helpful that Apple was up so high so the decline that started in 2015 will go for a very long time. We had iPad sales peak in 2014 and the iPhone and Macs, both, in 2015. Now in 2016 we are seeing the user base start the decline.

“Apple install base declining”


Great value stock but days of growth looks like in the past.
Search4Value profile picture
"days of growth looks like in the past"
and we've heard this for how many consecutive years now...???
Glen Rivard profile picture
Search, Well Apple peaked three years ago so it has been three years so far.
Surfaced again... Are you sure you don't push this story to lower the AAPL stockprice for you to BUY? I know your claims about having held AAPL yada yada... I believe SA commentary fields to be one of the places for manipulation, and you sure are prolific (if that is the right word). You and a few more in the stocks I follow...
Berkshire Hathaway just upped their share of Apple. Not sure if it was Buffet’s call or one of his deputies but it’s good news either way. Long AAPL!
neals58 profile picture
I liked the article that predicted $582 price by 2026. 275 is too low.
When is Apple going to buy Netflix?
Netflix valuation is too high at this point
I’m happy with 10% raise per year on the dividend.
As far as the cash who knows. Buyback would be best.
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