Editor’s note: This article was originally published yesterday, after market close.
Even as Apple Inc. (NASDAQ:AAPL) continues to get relentlessly crushed today following Cirrus Logic, Inc. (NASDAQ:CRUS)‘s preliminary release last night, there may still be two silver linings for Apple Inc. (NASDAQ:AAPL) investors. The data can’t all be bad (it’s mostly bad).
An earlier iPhone just got more likely
There was part of exactly one sentence within Cirrus Logic, Inc. (NASDAQ:CRUS)’s release that’s driving Apple Inc. (NASDAQ:AAPL) down today: “… due to a decreased forecast for a high volume product as the customer migrates to one of Cirrus Logic’s newer components.”
Apple Inc. (NASDAQ:AAPL) shareholders are getting rattled today by the notion of a “decreased forecast” for iPhones, at a time when investor sentiment and expectations are already remarkably low for the Mac maker’s prospects. There’s been plenty of concern that the company may miss its revenue guidance due to weak iPhone sales, as numerous rivals have launched high-end flagships and new iPhone models are months away.
However, within the latter half of that snippet lies a positive hint. Migrating to newer components could mean that Apple Inc. (NASDAQ:AAPL) is approaching its production ramp of its next-generation iPhone models. Investors have been expecting the company to launch new iPhones as early as June or July, but there has also been speculation that Apple is running into production challenges and may be forced to push back toward September or October.
If Apple Inc. (NASDAQ:AAPL)’s migration has already begun, then that means investors might be able to expect new iPhones sooner rather than later. It’s still a speed bump for Cirrus Logic, since it’s preparing for an inventory writedown, but in this case what’s bad for Cirrus Logic may not necessarily be all bad for Apple.
A killer dividend yield just got more likely
At Apple’s low today, its annual dividend yield has been pushed up to an impressive 2.6%. That’s the type of payout that could satisfy most income investors looking for a steady stream of cash.
Furthermore, that’s before even factoring in Apple’s inevitable dividend boost. There’s little doubt that Apple will increase its payout; investors just don’t know how or when the Mac maker will decide to return more cash to shareholders.
The company could easily double its dividend payout from $10 billion annually to $20 billion annually, which would likewise double its dividend yield to 5.2%. That’s nearly irresistible to income-oriented folks, and Apple wouldn’t even necessarily need to put up any growth or capital appreciation to keep those types of investors happy (though it wouldn’t hurt). At a 5.2% yield, Apple would easily be the best-paying tech titan, well ahead of rivals Microsoft Corporation (NASDAQ:MSFT) and Intel Corporation (NASDAQ:INTC), both of whom are renowned for their dividend generosity. That level of payout would also top both AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), which are defensive utility stocks.
| Company | Dividend Yield |
|---|---|
| Microsoft | 3.2% |
| Intel | 4.1% |
| AT&T | 4.7% |
| Verizon | 4.1% |
Source: Reuters.
If one bought in today and Apple subsequently doubles its dividend within the next couple months, the yield alone would make it a worthy income investment.
The article 2 Possibly Good Things About Apple’s Brutal Sell-Off Today originally appeared on Fool.com.
Fool contributor Evan Niu, CFA, owns shares of Apple and Verizon Communications (NYSE:VZ). The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, Cirrus Logic, Intel, and Microsoft.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
