Should I buy Apple stocks or options?

6 reasons to buy Apple stock and never sell it

Apple made history on August 2, 2018 when it became the first US public company in history to reach a market cap of $ 1 trillion. Since then, the company has maintained and even expanded its lead over the competition. The value is currently around $ 2.25 trillion.

The critics of the stock insist that there is no longer any great growth in Apple and that investors should better put their money elsewhere. But even as the world's most valuable company, there are still many reasons for investors to buy Apple stock and never sell it again. Let's look at six reasons in detail.

1. The Warren Buffett Seal of Approval

Investors can follow the example of legendary investor Warren Buffett. Since taking the helm at Berkshire Hathaway in 1965, the “Oracle of Omaha” has brought staggering returns to investors - with an average annual growth rate of more than 20%. By the end of 2020, his total return has grown a staggering 2,810,526% since he took over the company.

Buffett made no secret of his love for Apple and said, "It's probably the best company I know in the world." He went even further and noted:

“We bought about 5% of the company. I would love to own 100% of it. … We really like the economic side of their activities. We appreciate the management and the way they think. "

This is a clear commitment from one of the most successful investors in the world.

2. The resurrection of the iPhone

It wasn't that long ago that some announced the death of the iPhone. But the release of the latest line of equipment has shown that this is simply not the case. Apple launched four new iPhone models in 2020 - more than ever in a single year. The iPhone 12, 12 Mini, 12 Pro and 12 Pro Max cover the entire range in terms of sales price and functions.

In the Christmas quarter of 2020, Apple reported record sales of $ 111 billion, up 21% year over year. 59% of this comes from iPhone sales. That might just be the beginning. Earlier this year, CEO Tim Cook revealed that Apple has an installed base of 1.65 billion devices, including more than 1 billion active iPhones. Wedbush analyst Daniel Ives estimates that around 40% of iPhone users have not upgraded their device in the past 3.5 years. This could be the beginning of the long awaited “super cycle”. That could push Apple's market cap to $ 3 trillion over the coming year.

3. Apple as fashion objects

Investors shouldn't underestimate the growing importance of Apple's wearables business. In fiscal 2020 (which ended September 26, 2020), the company's wearables, home, and accessories segment grew 25% compared to 2019. It generated record sales of $ 30 billion and accounted for more than 11% of Apple's total revenue. Not only that, the segment even ended the year on a high note, with every product category - wearables, home and accessories - achieving record sales. Apple noted at the time that its "wearables business is now the size of a Fortune 130 company."

In the past six months, growth in this segment has accelerated. Wearables, home and accessories sales climbed nearly 28% year-over-year. Behind this was the strong demand for AirPods, AirPods Pro and Apple Watch.

4. Services as a growth driver

Cook announced in early 2017 that Apple plans to double its service revenue by the end of 2020. In July 2020, he revealed that Apple had achieved this ambitious goal six months ahead of schedule.

Business is set to take off quickly in 2021. For the second quarter of Apple's fiscal year 2021 (which ended March 27, 2021), the services segment had record sales of $ 16.9 billion. That is an increase of almost 27% compared to the previous year and the fastest growth rate in more than two years.

The gains were driven by 660 million paying subscribers across Apple's service segment, which includes Apple TV +, Apple Music, the App Store and iCloud. CFO Luca Maestri said the company's video, music, games and advertising businesses had a record-breaking quarter. The segment accounts for about 19% of Apple's total revenue - even with the recent surge in iPhone sales.

5. The dividend

Apple resumed its dividend in 2012 after a 17-year hiatus and has since become a strong dividend payer. The quarterly payout resumed at $ 0.095 and is up 132% in just nine years.

Apple announced this week that it would increase its quarterly payout to $ 0.22 per share, up 7% for 2021. Equally important, the company only uses 22% of its profits to fund the dividend. That gives Apple plenty of headroom for future increases.

6. Fewer stocks = a bigger slice of the apple pie

One aspect of Apple's return policy is its aggressive share buyback plan. The company has been buying back shares for years. With every quarter that goes by, Apple shareholders own a bigger stake in the Apple pie. Over the past decade, Apple stocks have fallen by nearly 36%.

The company has canceled an average of about 1% of its shares in each of the past four quarters and plans to continue this shareholder-friendly practice. Just this week, Apple announced that it would add another $ 90 billion to its existing share buyback program.

The article 6 Reasons to Buy and Never Sell Apple Stock first appeared on The Motley Fool.

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The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway. Danny Vena owns shares of Apple. This article was published on on May 3rd, 2021 and has been translated for our German readers.

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