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2015/03/09

The Top Dividend Stock to Own

Investor Research Institute Daily Newsletter

Presented by Wyatt Investment Research

 

 

Monday, March 9, 2015

investor research institute

The Top Dividend Stock to Own

by Marshall Hargrave

 

For just a minute, let's forget about what everyone is talking about today: the Apple Watch.

 

Granted, just last week I told investors about the various companies benefiting from wearable technology. And yes, there are a few underrated suppliers for the Apple Watch that will be big winners, including a unique opportunity we've found.

 

But, to start, I'd rather talk about Apple's dividend, and why it's easily the best dividend in the market.

 

Apple has been paying a dividend for three years now. Its annual dividend payout is up to $1.88 a share.

 

Now, I know what you're thinking: its yield is only 1.5%, how can it be the best dividend in the entire market?

 

For starters, it has upped its annual dividend payment by over 60% in just two years. It's gone from paying $1.15 a share in annual dividends to now paying out $1.88 a share.

 

And that $1.88 a share annual dividend is just a 25% payout of its earnings.

 

 

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This comes after Apple generated $18 billion in income last quarter, which is the most money ever made by a company in a single quarter. Its war chest of cash is up to over $175 billion.

 

And the stronghold on the smartphone market will continue to generate strong cash flow for years, driven by the widely popular iPhone 6. And the company still has various emerging markets to tap.

 

So there are plenty of reasons to believe that Apple will continue to up its dividend, as it continues to generate more cash than it can spend.

 

Analysts expect Apple to grow earnings by 33% this year. And even if it keeps its payout ratio at a measly 25%, that means it will up its dividend by 33% this year to $2.50.

 

Think about Apple's dividend another way. If Apple were to up its payout ratio to be more in line with Microsoft (Nasdaq: MSFT) at 50%, its annual dividend payout would be $3.75 a share.

 

And yet Apple would still have $30 per share in cash, or nearly a quarter of its stock price.

 

The Apple dividend story lies in the fact that earnings will continue to grow quite nicely over the longer term, driving the dividend higher. And its cash hoard makes the dividend one of the most secure you'll find.

 

But back to the earnings growth. Apple has already integrated itself deep into the lives of many consumers. And not just with its hardware like iPhones and iPads, but also with software, services and apps.

 

There's still Apple Pay, which could be a game changer. And we've yet to see the major impact from its acquisition of Beats, the popular headphone and streaming music company.

 

But for now, wearable technology will prove to be a very powerful trend, of which Apple has the ability to be at the forefront.

 

And the Apple Watch could signal the start of a wearable tech revolution. Today is the much anticipated Apple Watch reveal, with the watch expected to start shipping in April.

 

Now, we here at Wyatt Research still believe you can profit from buying Apple today. But there's still one overlooked supplier for the Apple Watch that might interest you. Just click here for all the details.

 

In the end, with Apple, you have a company with an ironclad balance sheet, generating more money than it knows what to do with, and tackling some of the biggest markets in the world.

 

It's hard not to see how this company's dividend is the best in the market.

 

Good Investing,

 

Marshall Hargrave

Columbus, Ohio

Investor Research Institute

 

Full Disclosure: Ian Wyatt currently owns shares of Apple (NASDAQ: AAPL).

 

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