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Big Dividend Plays With Long-Term Gains

AAPL Chart AAPL data by YCharts

Apple (AAPL - Get Report)

Background: Apple designs and markets mobile electronic devices, personal computers, and portable digital music players; and sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Apple was founded in 1976 and is headquartered in Cupertino, Calif. Apple trades an average of 16.7 million shares per day with a market cap of $567 billion.

52-Week Range: $363.32 to $705.07

Book Value: $125.86

Price-to-Book Ratio: 4.8

It's not a big secret I am an Apple bull in my Buy on Apple's Dip Ahead of Earnings article.

Shareholders receive a big $10.60 annually in dividend payments, but with the stock price as high as it is, the yield is "only" 1.8%. I tend to stick with stocks with yields of more than 2%, so you can wait and see whether the stock continues to retrace, allowing for a 2% yield entry or go for it now. The primary attractiveness for Apple is the company's stock fell to a near single-digit earnings multiple.

The forward earnings multiple comes from the generosity of sellers letting the price retrace over 7% in the last month. We now have the world famous and calorie-free "Apple dip" within our grasp. If you question how tasty the "Apple dip" is, pull up a weekly chart on Apple and look at each dip over the last five years. The "Apple dip" is one of the most consistent chart patterns in the last five years.
The last reported short interest is only 1.7% of the average trading float. The smart money doesn't believe Apple will continue falling, should you?
If you ask me "what dip are you talking about" I understand. Shares have really appreciated, gaining 49% in the last year, and the average analyst target price for Apple is $767.83. The current drop from $700 is our opening.

AAPL Payout Ratio TTM Chart AAPL Payout Ratio TTM data by YCharts
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SYM TRADE IT LAST %CHG
ABT $45.60 3.70%
AAPL $112.41 2.50%
GE $24.92 3.80%
MDT $73.47 1.70%
T $33.26 1.70%

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Chart of I:DJI
DOW 16,591.73 -63.04 -0.38%
S&P 500 1,987.66 +47.15 2.43%
NASDAQ 4,812.7080 +115.1720 2.45%

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