Apple Gives Up Dividend Advantage Over S&P 500: Chart of the Day

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The appeal of Apple Inc. for U.S. stock investors who favor dividend income may prove fleeting.

As the CHART OF THE DAY illustrates, shares of the maker of iPhones, iPad tablets and Mac personal computers no longer provide a higher dividend yield than the Standard & Poor’s 500 Index. The stock had yielded as much as 0.67 percentage point more since last year, after the company reinstated quarterly payouts for the first time since 1995.

Slower dividend growth is partly to blame for Apple’s reversal. The company raised its payout by 7.9 percent this year, which trailed a 15 percent increase last year.

Yet the main reason is Apple’s stock performance. Shares of the Cupertino, California-based company climbed 27 percent from April 23, when the higher dividend was announced along with a 7-for-1 stock split, through yesterday. The S&P 500 gained 4.7 percent in the same period.

Apple may not have much more room to advance without “the introduction of a product or service that creates a massive new profit opportunity,” Andy Hargreaves, an analyst at Pacific Crest Securities LLC, wrote three days ago in a report.

Hargreaves raised his 12-month price estimate on Apple by $7 a share, to $100. At that price, the stock’s dividend yield at the current payout rate would be 1.88 percent. Apple ended yesterday’s trading at a 1.86 percent yield, and the S&P 500 yielded 1.91 percent.

To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net

To contact the editors responsible for this story: Chris Nagi at chrisnagi@bloomberg.net Michael P. Regan, Jeff Sutherland

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