Apple Is Now a Stock for Income Investors at $150

When Apple (NASDAQ:AAPL) traded at below the $150 range during the big selloff before the Christmas holiday, the stock’s small rebound gave shareholders some hope. But the more likely scenario for AAPL stock in 2019 is its appropriateness as a dividend income investment. At around $146, the stock would pay a dividend yielding 2%.

A 2% dividend yield is not much, paying less than Cisco Systems’ (NASDAQ:CSCO) 3.09% yield but more than Microsoft (NASDAQ:MSFT) at 1.83%. Apple’s profit growth will likely keep growing in the quarters ahead, driven by service revenue growth. iPhone 7 and 8 sales should do well enough to bring in cash flow, while modest iPhone X and XS sales will keep the stock from rebounding by much.

Without strong device unit sales growth, the high ASP will not matter for investors. Markets are pricing in a slowdown in high-end smartphone demand. Apple is no exception to this downward trend. Its next iPhone iteration may renew demand but until the “S” cycle runs its course, investors should only AAPL stock for its income.

In late-2019 to early 2020, device sales growth may resume while services revenue grows even faster. A bigger share buyback and a dividend hike could finally give the stock the support it needs.


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