Over the past decade, Apple (AAPL) stock has astonishingly provided $847 Bil back to its investors through dividends and stock buybacks. Let’s examine some data to see how this payout capacity compares to the market’s leading capital-return companies.
CUPERTINO, CALIFORNIA – JUNE 10: Apple CEO Tim Cook delivers remarks at the start of the Apple Worldwide Developers Conference (WWDC) on June 10, 2024 in Cupertino, California. Apple will announce plans to incorporate artificial intelligence (AI) into Apple software and hardware. (Photo by Justin Sullivan/Getty Images)
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Interestingly, AAPL stock has delivered the most substantial returns to shareholders in history.
Apple Returns
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Why does this matter? Because dividends and stock repurchases offer direct, tangible returns of capital to investors. They also reflect management’s trust in the company’s financial stability and capacity to generate sustainable cash flows. There are also other companies that follow this model. Below is a list of the top 10 firms ranked by the total capital returned to shareholders through dividends and stock buybacks.
Top 10 Stocks By Total Shareholder Return
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To see the complete rankings, visit Buybacks & Dividends Ranking
What observations can you make here? The total capital returned to shareholders as a percentage of the current market cap seems inversely related to growth potential for reinvestment. Stocks such as Meta (META) and Microsoft (MSFT) exhibit much more rapid growth in a more predictable manner compared to others, yet they have returned a significantly smaller proportion of their market cap to shareholders.
This is the other side of high capital returns. While they are appealing, you must consider: Am I sacrificing growth and strong fundamentals? Keeping that in mind, let’s analyze some data for AAPL. (refer to Buy or Sell Apple Stock for additional information)
Apple Fundamentals
- Revenue Growth: 6.0% LTM and 1.8% three-year average.
- Cash Generation: Nearly 23.5% free cash flow margin and 31.9% operating margin LTM.
- Recent Revenue Volatility: The lowest annual revenue growth in the past three years for AAPL was -0.9%.
- Valuation: Apple stock has a P/E ratio of 37.0
AAPL
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The table provides a good overview of what to expect from AAPL stock, but what about the associated risk?
AAPL Historical Risk
Apple is not spared from substantial downturns either. It fell approximately 81% during the Dot-Com Bubble and around 61% during the Global Financial Crisis. Even the 2018 correction and the Covid crash caused it to decline by about 31-39%. The recent inflation spike led to a comparable 31% drop. Therefore, despite the many advantages associated with Apple, severe market disruptions can still significantly impact it. Quality stocks might mitigate the damage, but they cannot eliminate it entirely.
However, the risk is not confined to extreme market declines. Shares can decrease even when markets are thriving – consider instances like earnings announcements, business updates, and changes in outlook. Refer to AAPL Dip Buyer Analyses for insights on how the stock has recuperated from significant dips in the past.
The Trefis High Quality (HQ) Portfolio, featuring a collection of 30 stocks, has a history of consistently outperforming its benchmark which encompasses all three indices – the S&P 500, S&P mid-cap, and Russell 2000. Why is that? In aggregate, HQ Portfolio stocks have produced better returns with reduced risk compared to the benchmark index; providing a smoother investment experience, as demonstrated in HQ Portfolio performance metrics.