While many investors will choose dividend stocks that can offer them good payouts in the short-term, the wise investor will also think about adding some long-term investments to their portfolio. When choosing which are the best companies in which to invest, it is important to look both at their history and their potential future when deciding if they are a good long-term dividend stock investment. One option that you should consider is Apple (NASDAQ:AAPL), and here is why this is a solid dividend stock for the next 50 years.
Investor Place describes how the past, present, and future of Apple all contribute to making this company a good long-term dividend stock option. Apple was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. It quickly became one of the leaders in the consumer electronics industry, and they now design, develop and sell a range of consumer electronics, computer software, and online services. Its long history puts it at the forefront of this industry, and it is one of the best-known brands.
The smartphone element of this business is one of the main reasons behind the company’s success and why it has sales that have put it in the third position on the Fortune 500 list. It is currently the second-largest smartphone company in the world with more than 10 percent of the global market share.
Some of Apple’s key products include the iPhone, Mac, Apple TV, and the iPad. Globally, these products are recognized as being a premium brand, and this allows the company to enjoy substantial pricing power. In addition to these products, the company also has a portfolio of professional and consumer software that is known for seamless integration, a user-friendly experience, and innovative design.
According to US News, these factors all contribute to this company having strength in the current market and making it the most valuable company in the world with a market capitalization of $800 billion and annual sales in excess of $230 billion. It also makes them a good option for short and medium term option. So, why are they also a good bet for the long-term? The global scale of the company means that they have a greater chance of remaining profitable in the long-term, which also ensures that the company can continue to pay out dividends to shareholders in the coming decades.
Apple’s diversity in terms of the products and services they offer also puts them in a strong position for future success. Even if one of the products or services is making a loss, there are many other profitable products and services that will compensate for this in the overall finances of the company. Apple has also been clever in lassoing customers into the Apple ecosystem the company has created. Once a customer owns an Apple product, this is not the only money that Apple will make from them as the customer will then need accessories created by Apple so that they are compatible with the original product they have bought.
Similarly, the iTunes segment of the company attracts owners of Apple products to buy games, music, and other digital content. This results in Apple achieving a high-margin cash flow stream that is consistently growing annually. The future potential of Apple is a further reason why people should consider making long-term investments in Apple. There is a growing market for consumer electronics and digital products and services and people are becoming ever-more reliant on technology in their day-to-day lives. Experts in the fields of both finance and technology predict that this is a market that will continue to grow, so the future looks good for Apple and other companies that are technology focused.
Of course, the history of Apple’s dividend payouts is a significant factor to consider when deciding whether this company has long-term potential, as the potential yields are what is important to the shareholders. Apple first started paying out dividends in 2012. Since then, the dividend payout has steadily grown and there was an increase of approximately 11.6 percent annually between 2016 and 2019. This shows that Apple dividends are a steady and reliable option. The trend for dividend growth is partly due to Apple’s management putting a greater focus on dividend growth.
If you need inspiration from what other investors are doing, then one of the best sources of inspiration is investor Warren Buffett. Apple is one of the largest positions in his portfolio, so he clearly has belief in the long-term value of holding onto these stocks. Buffett is not alone in thinking that this is a good investment, as Apple is one of the most popular investments on Wall Street. With so many people investing in this company, they cannot all be wrong about its potential.
Of course, there have also been some low points in terms of dividend payouts to investors. According to The Motley Fool, Apple really let their shareholders down in the first quarter of fiscal 2019. This accusation was made in relation to the revenue growth estimation when shareholders were told that Apple would achieve a quarterly revenue record of $89 billion. Shareholders were then told by CEO Tim Cook that the actual figures would be $7 billion less than originally estimated. Apple blamed the lower-than-expected sales figures in Greater China for the failure to meet its targets.
However, this should not deter investors from considering this a safe long-term dividend stock from which they can continue to receive good yields for the next 50 years. This was only a temporary lapse and the company still has a lot going for it. The cash flow is strong, the dividend yield is compelling, and further dividend growth is likely. Overall, Apple stock is a great option for investors who want a sustainable and strong dividend that has significant potential for long-term growth.