1. Apple Inc. (NASDAQ:AAPL)
Berkshire Hathaway’s Stake Value: $84,248,000,000
Sector: Information Technology
Industry: Consumer Electronics
Apple Inc. (NASDAQ:AAPL) tops our list of the best Warren Buffett dividend stocks. The hedge fund reduced its massive stake in the tech giant during the second quarter of 2024, which was unexpected given Buffett’s reputation for long-term investing. The fund’s AAPL stake was valued at $84.2 billion at the end of the second quarter, indicating that Buffett had sold just over 49% of the tech investment. Despite this reduction, the company remained by far Berkshire’s largest stock holding. Buffett had already cut the Apple stake by 13% in the first quarter and mentioned at the Berkshire annual meeting in May that the sales were partly for tax reasons. He suggested that selling “a little Apple” this year could benefit Berkshire shareholders in the long run if future US tax policy increases capital gains taxes to address a growing fiscal deficit. The company represented over 30% of the firm’s 13F portfolio.
Where Berkshire slashed its AAPL stake, Baron Funds reinitiated its position in Apple Inc. (NASDAQ:AAPL) during the second quarter of 2024. The firm highlighted the strengths in the company’s business in its Q2 2024 investor letter:
“This quarter we re-initiated a position in Apple Inc. (NASDAQ:AAPL), a leading technology company known for its innovative consumer electronics products like the iPhone, MacBook, iPad, and Apple Watch. Apple is a leader across its categories and geographies, with a growing installed base that now exceeds 2 billion devices globally. The company’s attached services – including the App Store, iCloud, Apple TV+, Apple Music, and Apple Pay – provide a higher margin, recurring revenue stream that both enhances the value proposition for its hardware products and improves the financial profile. Apple now has well over 1 billion subscribers paying for these services, more than double the number it had just 4 years ago. The increasing services mix has led to healthy operating margin improvement, providing more free cash flow for Apple to reinvest in the business and to distribute to shareholders. Throughout its 48-year history, Apple has successfully navigated and capitalized on major technological shifts, from PCs to mobile to cloud computing. We believe the company’s leading brand and device ecosystem position it to do equally well in the AI age, and this was the driver of our decision to re-invest. “Apple Intelligence” – the AI strategy unveiled at Apple’s recent Worldwide Developer Conference – leverages on[1]device AI and integrations with tools like ChatGPT to enhance user experiences across its ecosystem. The AI suite enables users to create new images, summarize and generate text, and use Siri to perform actions across their mobile applications, all while maintaining user privacy and security. We think Apple Intelligence can drive accelerated product upgrade cycles and higher demand for Apple services. The combination of growth re-acceleration, increasing services contribution, and thoughtful capital allocation should continue driving long-term shareholder value.”
Apple Inc. (NASDAQ:AAPL) reported strong earnings in its fiscal Q3 2024. The company’s revenue for the quarter came in at $85.7 billion, which saw a 4.8% growth from the same period last year. In addition, its cash position was also stable, generating $29 billion in operating cash flow. The company returned $32 billion to shareholders through dividends and share repurchases.
Apple Inc. (NASDAQ:AAPL) currently offers a quarterly dividend of $0.25 per share and has a dividend yield of 0.44%, as of August 21. In May this year, the company raised its dividend for the 12th consecutive year.
Apple Inc. (NASDAQ:AAPL) was a popular stock among elite funds during Q2 2024, as per Insider Monkey’s database. The hedge fund positions in the company jumped to 184 in Q2, from 150 in the previous quarter. The stakes owned by these hedge funds have a collective value of more than $124 billion.
While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than AAPL but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
