iPhone 5, Dividend Payout Will Keep Investors Buying Apple: Sozzi
Apple (AAPL) is testing April highs today on news that the soon-to-be-released next generation iPhone is driving down prices of the iPhone 4S at several national retailers. Investors, however, have not been scared off by the high share price and are buying in anyway, so Breakout welcomed Brian Sozzi, chief equities analyst at NBG Productions, and asked if there is anything that will frighten them out of the stock.
"I can see a world where you can just continue to buy the stock," says Sozzi, "because you got that dividend check. You're gonna want to go buy more Apple in front of key product launches. The stock could just continue to go higher."
Breakout's Jeff Macke argues that there was nothing wrong with what Apple was doing pre-dividend and "for the first time in their life they actually need cash to develop new product, and they're giving it to me" instead.
That dividend of $2.65 a share will be paid out this Thursday after the closing bell. Sozzi says that number is only going to grow as the tech giant will continue to increase the shareholder payout every year to entice investors as their growth potentially slows. "If they're not going out there and acquiring companies — which they're not, necessarily — their earnings growth will slow and you're gonna need a hook."
While consumers and investors look for a "hook" in Apple's next big product launch (the new iPhone is expected to be unveiled at a September 12th event), the media is beginning to speculate on a potential stock split and a possible inclusion of Apple in the Dow Jones Industrial Average, something recently discussed on Breakout as well.
Sozzi isn't so sure that speculation will become reality. "I don't think they want to be a part of the Dow," he says. "I think they view themselves as a high growth tech play...it doesn't benefit them to go out there and split the stock. Investors are showing a willingness to buy the stock at these prices."
Is Apple's share price scaring you off, or is the dividend enough to keep you coming back for more? Let us know on our Facebook page.