Apple… An Income Play?
Despite the Washington-fueled insanity of the past few months over dividend tax hikes, dividend stocks are still the best places for the equity portion of retired or about-to-retire investors.
And the manager of the T. Rowe Price Dividend Growth fund, Tom Huber, thinks the best sources in today’s market for dividends and dividend growth are in technology companies.
Yes, technology companies!
Huber stated in a Barron’s article that a company’s ability to grow its dividend is as important as its ability to pay it. And technology companies that have what he calls “durable business models” – the ones that can grow for the next five years and increase their dividends – are where the new dividend opportunities lie.
Two of his picks were Automatic Data Processing (Nasdaq: ADP) and Accenture (NYSE: ACN), the technology-consulting firm. He likes them for their recurring revenue – and greater stability than most of the tech sector.
But the big surprise from Huber is Apple (Nasdaq: AAPL). In his words, there is nothing not to like about AAPL – not as a growth company, but as an income play.
AAPL is way off its highs. But the company has huge earnings power, and lots of room to grow its already-respectable 2.1% dividend rate. Yes, AAPL’s dividend payout at the current price is around 2.1%.
It is also trading below S&P earnings multiples, and Huber thinks it is one of the best stocks you can own.
Did you ever think you’d see the day when AAPL, the ultimate growth stock, would be the darling of a growth and income manager?
While we’re on the subject of dividends, take a look at the work being done in dividend stocks by Marc Lichtenfeld. He has a New York Times bestselling book on dividend investing. You can review it at www.getrichwithdividends.com.
Dividends… They make sense now and down the road.