by Robert Martin | July 2, 2014 11:30 am
Whether you’re an Apple (AAPL) fanboy or iPhone hater, you simply have to respect the company.
And if you don’t, you’re in the minority.
As Barron’s recently reported, Apple is once again the world’s most respected company — as it has been for four out of the past five years. It was temporarily dethroned by Warren Buffett and Berkshire Hathaway (BRK.A, BRK.B), but has climbed back to the top of the tree.
Considering just Apple stock, it’s easy to see why. Shares of AAPL stock are up over 17% since the start of the year, more than doubling the S&P 500. Zoom out to the past 12 months, and shares of Apple stock have soared more than 65%, nearly tripling the broader market.
But why exactly do investors give AAPL stock so much R-E-S-P-E-C-T?
Let’s take a look at five top reasons:
Apple Stock Split. One thing that put Apple in the headlines and arguably helped AAPL stock climb higher was its ambitious and unusual 7-for-1 stock split. The Apple stock split garnered mixed reactions, with many rolling their eyes at the “financial engineering” that is any stock split. Still, others pointed out that the Apple stock split was a vote of confidence, agreed that it made shares of AAPL stock more accessible to more retail investors, and likely applauded as shares indeed continued their upward momentum.
Solid Earnings. Over the past five years, Apple earnings have grown by 50% on average … per year. Take a moment and digest that — especially considering that time period includes the down-and-out years where many were calling for the end of AAPL growth. Of course, any savvy investors know that, a lot of the time, earnings expectations are far more important than actual earnings. Luckily, Apple earnings have had no problem clearing whatever bar set for them, beating expectations for the last four quarters in a row.
Dividend. Usually, there’s a clear distinction between dividend stocks and growth stocks. Slow-moving companies — like Verizon (VZ), for example — often shell out a generous dividend to make up for their lack of organic growth. Meanwhile, companies that still are expanding focus on using any extra cash to keep doing just that. But AAPL stock is a bit of an outlier in this regard, offering the best of both worlds. Apple earnings are still getting better … and so is the company’s payout. The current Apple stock dividend is 47 cents per share, good for a yield just north of 2%. Just compare that to other tech giants often mentioned in the same breath as AAPL stock for proof that this is unusual; Facebook (FB), Google (GOOG), Amazon (AMZN) and Tesla (TSLA) don’t offer payouts at all.
A Clear Impact. As Barron’s noted in its coverage of Apple’s regained title, “personal experience probably plays a role, too, in judging prominent consumer companies.” This makes sense, even if investors don’t want to acknowledge it — if you’re familiar with the ins and outs of a company’s business, it’s much easier to buy into that company’s story. But for Apple, it also goes a step further. It’s not just one head-turning gadget, but a whole line of them that have arguably reshaped the tech world and, quite frankly, our lives. We see iPhones, iPads, and Mac computers everywhere we turn — many of us are glued to those very devices, or at least to their copycats.
The AAPL Stock Comeback. Let’s be real — everyone loves a comeback story. In case you were too busy kissing Apple’s feet to remember its slump, shares of AAPL stock got shot down an ugly 40% from late 2012 to early 2013. Everyone loved to kick AAPL stock when it was down, too … but the fact that shares got pummeled and still managed to regain ground and regain investor trust is just another reason to give Apple at least a little respect.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.
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