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Has Apple Become an Income Stock?

NEW YORK (TheStreet) -- Not too long ago Apple(AAPL - Get Report) was the darling of growth investors. It was even touted in early 2013 as a $1,000 stock by 2014 or 2015.

For that to happen, Apple's stock would have to rise almost 80% from its current price of $561. That potential hasn't been demonstrated over the last 12 months as Apple trailed the Dow Jones Industrial Average and the Standard and Poor's 500 Index with an increase of just 8% in a robust bull market.

Where Apple is topping other stocks is in its dividend yield.

Apple's dividend yield is 2.17%, compared with the average for a member of the S&'s 500 of 1.87%. With an earnings payout ratio below the average for an S&P 500 member, Apple has plenty of cash to increase its dividend and initiate share buybacks.

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There might not be much else coming to please those owning the stock.

There were many bullish events for Apple in 2013. It signed a deal with China Mobile(CHL), the world's largest cell-phone company, to offer the iPhone. Activist Carl Icahn has been pushing for changes to reward shareholders. Plenty of new products were trotted out with lots of media coverage in both the popular and industry press. And there were record sales of mobile devices -- including iPhones and iPads -- during the holiday shopping season.

Bill Miller, manager of the Legg Mason Opportunity Trust Fund, the top mutual-fund performer from 2012, told CNN Money in February that Apple was his favorite stock, and in another interview, he compared Apple with Nike(NKE) in that both have strong consumer brands.

Consumer stocks are not known as growth investments, but rather as defense holdings with healthy dividends, while in the past tech companies were known for growth because they believed that their capital was better deployed in acquisitions, research and development and other areas as opposed to paying dividends. Now tech heavyweights Apple, Microsoft(MSFT - Get Report) and Intel (INTC) have higher-than-average dividend yields.

Just as Icahn and Miller like Apple's stock for the potential of higher dividends and share buybacks, the shares might be most attractive for their income potential rather than for their history of growth.

Jonathan Yates does not have a position in any of the stocks mentioned in this article.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Jonathan Yates has written for numerous publications including Newsweek and The Washington Post. He is a former general counsel for general counsel for a publicly traded corporation. Much of his career was spent working on Capitol Hill for Members of Congress in both the House and Senate. He has degrees from Harvard University, Georgetown University Law Center and The Johns Hopkins University.

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