It is noteworthy that Apple has increased dividend growth since 2012 and more than doubled its dividend per share in seven years. Most of Apple's dividend increases were about 10%, although last year's increase was only 5% and combined with the share buyback. Currently, Apple's dividend is only about 1%. But that handout will no longer be if it continues to be an amazing ride. I expect the AAPL dividend to increase by 10% plus, which will certainly be a good reason to buy some Apple shares in 2020.
AAPL's quarterly dividend is $0.77 per share, a total increase of 103.4%. Apple wants to return money to investors, and paying a dividend is one of the best ways to do that. In 2014, the company reintroduced its dividend policy and granted investors a split-adjusted - quarterly distribution.
Based on dividends paid over the past eight years, Apple has made a total of $1.1 billion in earnings per share. We love how Apple can increase earnings - per share - while paying a dividend of more than 10% of its annual profit. This property suggests that the company is reinvesting to grow its business, while the conservative payout ratio also implies a reduced risk of having to cut the dividend in the future. I am interested to know whether increasing dividends with profits over several years could be a sign that the company intends to share this growth with shareholders. Investors do not expect growth companies to distribute the bulk of their earnings to better invest funds in investments that could yield higher returns in the future.
Apple brings in billions of dollars of free cash flow each year, which plays an important role in its long-term financial health and cash flows. The company's current net cash position is $163 billion and, given the company's increasing financial and operational flexibility, it aims to become near "net cash neutral" over time. This massive net cash position has been something management has been worried about in recent years. AAPL shares have risen more than 30 percent in the past 12 months and years. They believe it is time for investors to move on. It makes sense to make money off the table.
The 16% increase in dividends follows a favorable change in tax law that gives shareholders an increase in the revenue that Apple shares could generate for them. A smaller 5% increase was brought into play because it would permanently slow down the pace of dividend growth. The payout per share has more than doubled in seven years, but the share price gains have clearly outpaced the dividend growth rate.
It seems logical that a significant amount of cash left on the balance sheet would affect dividend growth. This year's 5.5% increase is the smallest annual increase Apple has granted shareholders since the start of its current series. The company is known for double-digit annual increases, so it can be said that this can be disappointing.
As an investor, you can choose to buy shares in an individual company like Apple. There are actually two types of shares that can be bought. You could buy an Apple stock, and Apple dividend and a share price per share. At this point, I am using the same method of buying shares like Apple, but there is actually a different way to buy every single share (or share) of a company that is capable of successfully increasing its earnings. The higher its share prices, the more its potential future cash flows will increase due to its cash flow potential.
Perhaps unsurprisingly, Apple's dividend is better than what the company can afford. At the current rate, the dividend will inject nearly $2.5 billion in cash into the companies each quarter. Under the Dividend Cover, which measures how much cash from operating cash flow is available for dividends to shareholders, Apple exposes itself to a significant financial burden when it distributes a dividend.
This is not based solely on using the largest mountain of money in history to finance large buybacks and strong dividend growth in the foreseeable future. Together with its huge sales volume, Apple generates an enormous flow of cash flow that allows the company to more than double its current dividend yield. More importantly, for investors, strong pricing power means Apple enjoys the best profitability in the industry with the highest return on invested capital and the lowest cost of capital. This is despite the fact that the company's share price has returned more than $300 billion in the last five years since it began in 2012.
Given that Apple now pays out billions of dollars annually to its shareholders, it may seem surprising to learn that the company has not paid a dividend for less than a decade. Apple abandoned its modest initial payout during the tech boom of the mid-1990s, and shareholders had to come to terms with the fact that they had no income from their Apple shares until the early 2010s. At that point, however, Apple made up for a lost time by introducing a dividend in 2012. With a distribution of around 30% of the profit, they distribute a dividend yield of 2%.
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