Monday, January 27, 2014
Apple – Low-hanging Fruit for Dividend Investors
Apple (AAPL) is one of the most recognized names in consumer electronics. The company has acquired a formidable reputation as a manufacturer of cutting-edge consumer technology, and has recorded stellar growth with its revolutionary products.
The company banks heavily on sales of its popular handheld devices, the iPhone and the iPad; and while legacy products like personal computers, portable music players and related software remain in the company’s portfolio, they have taken a backseat in terms of their contribution to the company’s topline.
The company generates more than 50% of its revenues from sales of the iPhone – a coveted product ever since it revolutionized the mobile phone industry. In 2007, the year it was unveiled, the company sold 1.4 million units of the iPhone. As of 2013, more than 150 million have been sold.
The iPad tablet is the company’s second-highest revenue earner. Mirroring the runaway success of the iPhone, iPad sales have skyrocketed from 7.5 million units in the year of their introduction (2010) to 71 million units in 2013.
Due to solid sales of the two products, Apple has accumulated a cash pile of more than $146 billion. It is now being pressured relentlessly by high-profile activist investors to increase returns to shareholders in the form of share buybacks.
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