Apple stock’s 20% annual return

Today I am sharing key metrics for this cash machine that is Apple computers as a business. These are observed facts and I had to check them several times on the internet to make sure of the accuracy. Sometimes the market gives you the opportunity to buy a Porsche for the price of a Toyota corolla,  unfortunately there is so much noise in the media that most people can’t focus on what’s very important when owning a business.

That is FREE CASH FLOW GENERATION.  

First I wanted to share this graph that shows how dominant this company is in terms of revenues. You have to basically add all those big tech companies to come up to what Apple is making.

APPL REVNUE

now let’s look at FREE CASH FLOW GENERATION 

You’re looking at a company that makes 138 millions $ of PROFITS EVERY DAY OF THE YEAR

fcf apple

see below to compare

other guys

 

Now let’s look at the current payout ratio of the dividend which the % of profits Apple pays in dividends. As you can see the company can easily grow dividend payout to shareholders for the coming years no problem. I would say by at least 10% yearly. Can you find a safer dividend growth stock at current valuations?

div growth

Now let’s look at the dividend growth since 2013, as you can see free cash flow plays a big role in outpacing other less profitable companies. 

growth of the dividend

The cherry on the sunday is that the comany ability to create this free cash flow will eventually go towards buybacks. If the company buy 4% of its shares on average for the next 10 years the outstanding shares will drop by 40%

NOW WE’RE READY TO GIVE YOU WHAT WILL HAPPEN AT THIS PACE OF WORLD CLASS BUSINESS EXECUTION.

YOU’RE LOOKING AT A TOTAL RETURN OF : current  Dividend yield + dividend growth rate * share buybacks ratio =  1.6% + 10% * 1.4 = 16.24% yearly return. I believe Capital gain can bring it to 20% annually.

 

 

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