APPLE INC. $603 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 932.4 million; Market cap: $562.2 billion; Price-to-sales ratio: 4.4; Dividend yield: 1.8%; TSINetwork Rating: Average; www.apple.com) is up about 50% since the start of 2012, mainly due to strong sales of its iPhone smartphones and iPad tablet computers.
The company now plans to reward its shareholders by returning some of its $97.6 billion, or $104.70 a share, in cash and investments (as of the end of 2011.)
In the fourth quarter of its current fiscal year, which ends September 30, 2012, Apple will start paying quarterly dividends of $2.65 a share; the annual rate of $10.60 yields 1.8%. Apple also plans to buy back $10 billion of its shares over the next three years.
In all, these moves will cost the company $45 billion. That still leaves it with plenty of cash to keep developing new products and expanding its chain of retail stores.
Even after its recent gains, Apple trades at a moderate 13.9 times the $43.26 a share that it will likely earn in fiscal 2012. The payout will also make Apple more appealing to institutional investors, who tend to downplay companies that don’t pay dividends.
We still see Apple as a buy. However, if buying more would put the stock above, say, 5% of your portfolio, we advise against it.
