AAPL: Apple Dividend Analysis

Apple Inc. (AAPL) resumed its dividend payments in 2012 after a 17-year hiatus. At the end of its fiscal year 2011, it had accumulated cash and cash equivalents of over $25 billion. That cash hoard has grown to $38 billion as of the end of the fiscal year 2020.

Since then, Apple has seen a steady rise in revenue and earnings, allowing it to increase annual dividends. It’s also managed to steadily increase its dividend payment to shareholders. As of July 18, 2021, it was paying a $0.22 per share quarterly dividend, which gave the stock a 0.6% dividend yield.

Dividend Payout

Apple’s dividends paid totaled $14.1 billion for the fiscal year 2020. The net income for 2020 was $57.4 billion, which put the dividend payout ratio at 25% for the year. For 2018 and 2019, the dividend payout ratio was 26% and 23%, respectively. For the past three years, Apple’s dividend payout ratio has stayed relatively steady. In both 2020 and 2019, the company paid out $14.1 billion in dividends, and in 2018 it paid $13.7 billion. In the meantime, its cash hoard of cash and cash equivalents remains relatively high at $38 billion.

Dividend Yield

While dividend payout is a measure of financial strength often used in fundamental analysis of stock investments, the dividend yield is more useful for investors with an overwhelming goal of receiving investment dividends.

For dividend investors, stock price appreciation is usually a secondary priority to the dividend income. A stock’s dividend yield is the annual dividend divided by the stock’s trading price. Apple’s quarterly dividend as of the second quarter of 2021 was $0.22 per share. Based on Apple’s stock price as of July 18, 2021, of $149.39, its dividend yield was 0.6%.

Even though Apple’s annual dividends have consistently increased in the years after the company’s 2012 dividend reinstatement, its stock has—at times—risen at much faster rates, potentially resulting in its dividend yield being less competitive for investors interested in dividend income.

Dividend Growth

For most companies, a dividend cut is an exception, rather than the norm. Ideally, companies increase their dividends over time, assuming their revenue and earnings growth can support it.

Apple’s quarterly dividend paid during the second quarter of 2021 was $0.22, a 7% increase from the $0.205 paid during the first quarter of the year. During the second quarter of 2016, Apple paid a split-adjusted quarterly dividend of $0.1425, suggesting a 9.1% annualized growth rate in Apple’s quarterly dividend over the last five years.

For the fiscal year 2018, Apple paid a split-adjusted annual dividend of $0.68. For 2019, its annual dividend was $0.75, and in 2020 it was $0.795. Its annual dividend grew by 10.3% from 2018 to 2019, and 10.6% from 2019 to 2020.