When Steve Jobs died on October 5th, Apple's share price sat at $378.25 without a dividend. Just about six months later, $251.07 and a 1.8% dividend later, the stock stands today.
CNBC did a recent survey which tells the true story of Apple's rapid ascent through the ranks, with 51% of households reporting that they own at least one Apple products. This means that half of American households are now ensconsed in the iWorld, and the interconnectedness of each of the company's devices gives owners the desire to keep buying more and more.
While tech stocks are extremely difficult to predict due to the rapid changes that occur within the industry along with the heavy competition amongst technology companies to be ahead of the curve when it comes to products, Apple has somehow found a way to manage consistency. With consistent Earnings Per Share (EPS) growth since 2003, to go along with increased sales per share every year since 2001, from a technical standpoint, this tech stock blows the rest out of the water. For a point of comparison, Amazon.com has achieved an increase in EPS in 5 out of the last 8 years, and their earnings are a fraction of Apple's. Apple currently has two of the highest demand products, the iPad and the iPhone, and with record sales for both and a new iPhone in the works, the incredible sales figures look to keep growing.
Under Steve Jobs, Apple never gave out a dividend to its constituency, under the logic that Apple could use the cash better itself then to give it back (his same logic for why he personally did not undertake many philanthropic measures). What new CEO Tim Cook has done is set a very reasonable dividend, which will only help this stock for multiple reasons. First, he set the dividend at 1.8% for a reason, that is the annual return of the S&P 500. Second, by creating this dividend, it allows hedge funds that only invest in dividend stocks to now invest in this company, creating a whole wave of new Apple investors.
Another positive thing for Apple and its stock is how connected people feel to the brand, and the amount of emotion Apple stocks and products stir up. With nearly 55 million homes owning an Apple product and the average home owning 1.6, people are more likely to be hesitant to sell the stock. When one owns shares in Caterpillar, an excellent investment in my opinion, they see numbers on a page as very few people own a tractor or other construction equipment. Through the lack of an attachment to the company, people have no issues selling the stock. But what happens when you want to cash out on your Apple shares, as you stream the quotes on your iPhone and go home and think about executing the trade on your iPad?
With Topeka Capital Management placing a price target of $1,001 on Apple's shares within the next twelve months, Apple has solidified itself as one of the most remarkable investments one could have made, with a 67% increase over the last 6 months on the stock. The real question is, can it last?
When a company is on top as Apple is, it is extremely difficult to maintain as expectations keep rising to seemingly unattainable heights. With that being said, if there were any company that seems poised to break the mold, it would be Apple. There is one small caveat attached to all of this, CEO Tim Cook has done an excellent job running Apple; however, other than the dividend, much of his success has been piggy-backed off Jobs' ideas. Without the great innovator around, will the team at Apple be able to come up with the next iPad or other revolutionary device?