Apple’s 4 to 1 stock split (NASDAQ : AAPL) sent shares into a wild buying spree, and for the first time Apple hit market cap of $2 trillion.
Many Bearish investors noticed overvalued shares and urged investors to sell their stock.
If you just bought Apple because of FOMO (fear of losing out), then it would be a good time to exit your place now. Buying stocks dependent on large run-ups is never a safe idea for long-term investment.
Emotions overtake rationality, and most investors end up purchasing Apple stock close to the top and have to sell fear to prevent big losses.
But Apple is one of the few buy-and – hold stocks in their retirement years that will reward conservative investors with passive income.
To unlock the true value that lies behind Apple stock, let ‘s look at the power of increasing dividends.
Rising dividends are the secret to investment success over the long term
When everyone is concerned about estimates and valuations of short-term sales, I like to look at what I am currently getting as an Apple shareholder.
That means I ‘m looking at dividends and I want to see a steady rise in dividends payable over time.
Apple last paid out 82 cents per share in the latest quarter, raising its payout by an average of 10 per cent over the last five years.
Additional share buybacks in the future will give shareholders additional value, but the true power of Apple stock lies in the dividend payments.
Apple will be paying shareholders about $1.47 per share in dividends for the next 10 years using a modest 6 percent dividend growth rate.
In the future, selling on a panic dip can cause regret, as those can dividend payments stack up. The power of compounding dividends enables your portfolio to expand on autopilot as you withdraw from the workforce and move away.
Another advantage of owning Apple stock during a panic selloff is that when the stock price falls, the shares receive a higher yield.
We ‘re not even talking about future capital gains, but Apple shares a ludicrous 33 percent CAGR over the last 15 years (by trailing returns per AAPL Morningstar) in case you didn’t know it.
Dollar Cost Averaging could beat timing the Market
Instead of getting stuck in the loop of purchasing hysteria and panic selling, I use averaging dollar costs when investing in companies like Apple like A+.
Averaging the cost of dollars is a surefire way of establishing a greater place while minimizing the emotional burden of trying to time the demand. Every month you only buy a set amount of Apple stock and purchase more shares when the price goes down.
Apple has an impressive long-term track record, and it will continue to grow and represent its fanbase very well. Whether it’s selling iPhones or heading towards a recurring subscription-based model, I think Apple will remain at the top of the tech sector.
5 G, Modern Mobile Devices & Services will dominate a decade-long plan for Apple
Apple would be a major beneficiary of the 5 G transition, since higher download speeds would render core electronics and devices a must-have item for any user.
There is no question that when it comes to smartphones, laptops and other electronics, Apple is the benchmark in gold. Even during the COVID-19 pandemic the Apple brand is still solid.
Smartwatches are another new trend which I have seen late. Owing to the rise of smartphones, a watch ‘s conventional aim of telling time lost its importance, but smartwatches pack a lot of strength.
I expect smartwatches will catch up over the decade and become a strong revenue driver alongside Apple’s long-standing core of iPhones, Macbooks and iPads.
The subscription service model is also continuing to develop. Can the recurring Apple sales company in future surpass its income based on the product?
It’s too early to say, but according to CFO Luca Maestri in the Q3 2020 Earnings call, Apple has over 550 million paying subscribers across all platforms.
Is Apple(AAPL) a good buy?
With a huge cash pile of $193 billion, Apple carries enough cash to comfortably withstand any short term issues.
I ‘m excited to see where Apple is going as we’re working towards 2021. New product releases, broad 5 G adoption and a huge subscription company can continue to (literally) pay dividends for Apple shareholders.
It’s tempting to sell Apple stock and search elsewhere for fast returns, but that could be a costly mistake for the cautious investor in dividend growth.
I’ll keep buying Apple stock and watch those dividends piling up.