On the episode, Braden Dennis discussed how he likes to discover firms with a high Return on Invested Capital (ROIC), which is a measure of how effective a company’s management is, and one of his favorites was Visa (V).
Well, I adore Visa and consider them to be my “favorite buy and own for eternity” company, as they not only have a great ROIC but also pay a dividend!
Why are they handing out money, even if it’s a modest dividend, if they’re efficient users of investment capital, i.e., if they spent more, the business would expand faster, right?
So, those are the two things that I think about when I’m looking at dividends, and while it may appear that I didn’t mention Apple at all, trust me – you’ll see where I’m going with it.
So, as I previously stated, Apple pays a dividend – but what is the history of that payout over time?
In comparison to some of the other firms I’ve looked at previously, such as JNJ and MMM, Apple has a strange history.
Both of those firms are Dividend Kings, whereas Apple is the polar opposite.
Apple paid a fairly constant dividend from 1987 to 1995, then took a long break until resuming payments in 2012 and continuing to do so until September 2021, with their most recent dividend of $.22/share, or a yield of.58 percent, given in August 2021.
So, why did Apple halt dividend payments in the 1990s?
Some people may not realize it, but Apple actually faced tremendous challenges early on in their business.
They were attempting to compete against the big dogs while operating on a shoestring budget.
When you look about it, Apple was a true disruptor (pushing the market away from CDs and toward MP3s), and any firm that does that requires a considerable amount of cash, so paying a dividend was just not an option.
Another factor is that, rather of growing organically, big digital companies frequently undertake acquisitions when they need to grow in a specific direction.
Acquiring someone who is crushing it in a certain area of business that would be really beneficial to your organization could be both cheaper and more efficient.
Rather than spending years and years and a lot of money trying to catch up, you can simply buy the company and start profiting from the synergies right away.
So Steve Jobs wants to save some money:
“We know if we need to acquire anything, a piece of the puzzle to construct something large and bold, we can write a check for it instead of borrowing a lot of money and risking our entire company,” he said. “Having cash in the bank provides us with a great deal of security and freedom.”
I actually discovered a really interesting Q&A from the International Business Times about Apple after they stopped paying their dividend in the 1990s and before they started paying it out again to give some perspective on why a firm might wish to keep that cash.
If you only look at the Apple Dividend History, you’ll be missing out on a lot of information.
As you can see in the chart below, the dividend appears to be very steady until 1995, when it abruptly drops off, and then resumes in 2012:
Is Apple a good dividend stock?
Growth in Dividends Apple paid a $0.68 split-adjusted annual dividend in fiscal year 2018. Its annual dividend was $0.75 in 2019, and $0.795 in 2020. From 2018 to 2019, its yearly dividend increased by 10.3 percent, and by 10.6 percent from 2019 to 2020.
How often does Apple stock pay a dividend?
Apple pays dividends on a regular basis. Apple, like most other dividend-paying corporations in the United States, pays four dividends per year, which means that investors get a dividend payment every quarter.
Is Apple a monthly dividend stock?
From 1987 until 1995, Apple paid a dividend on a regular basis before ceasing to do so in 1995. Apple resumed paying a dividend in 2012, and it has increased it year after year since then.
Apple increased their quarterly dividend by $0.05 ($0.20 per year) even in the age of COVID. Apple pays a dividend that is nearly double what it was in 2012.
In 2012, Apple resumed paying a dividend. The business chose to reactivate its dividend program after seeing such great success with its iPod and subsequent iPhone and iPad offerings – devices it produced with the money it saved by not paying dividends for those 17 years.
In addition, it began a share repurchase program. In 2012, Apple’s dividend alone cost $2.5 billion per quarter, making it one of the top dividend stocks. Dividends and stock repurchases are expected to cost $45 billion, according to the business.
Apple currently pays a $3.28 annual dividend, which is paid in quarterly installments of $0.82. The dividend yield for the company is 0.85 percent, which is about average for tech equities. In comparison, the S&P 500’s average dividend yield is little under 2%.
Why is Apple’s dividend so low?
It’s because Apple’s new debt has an extremely low interest rate. Particularly on the $2.5 billion in five-year notes, which have a lower after-tax interest cost for Apple than the cash dividend it pays to its common stockholders. Apple, on the other hand, does not get a tax break on the dividend.
Does Apple pay dividends 2021?
On November 5, 2021, Apple Inc. (AAPL) will begin trading ex-dividend. On November 11, 2021, the company will issue a cash dividend of $0.22 per share. The cash dividend is payable to shareholders who acquired AAPL before the ex-dividend date. AAPL has paid the same dividend for the third quarter in a row. The dividend yield is.58 percent at the current stock price of $151.49.
Are dividends paid monthly?
Dividends are normally paid quarterly in the United States, while some corporations pay them monthly or semiannually. Each dividend must be approved by the board of directors of the corporation. The corporation will then announce when the dividend will be paid, how much it will be, and when it will go ex-dividend.
How much does Apple pay per stock?
AAPL pays a $0.87 per share dividend. The yearly dividend yield for AAPL is 0.58 percent. Apple’s dividend is lower than the 1.43 percent industry average in the United States, as well as the US market average of 4.24 percent.
Is Tesla a dividend stock?
Tesla’s common stock has never paid a dividend. We want to keep all future earnings to fund future expansion, so no cash dividends are expected in the near future.
