The incredible run of Apple Inc.'s (NASDAQ: AAPL) stock has been well documented, along with the share price's short-term movements, the company's cool factor and its product lineup. Examining the outcome of buying $100 worth of Apple shares at the beginning of January 2002 provides a means of analyzing the stock's movements.
The First Five Years.
The closing share price on Jan. 2, 2002, which was the first day of trading for the year, was $1.66. (All prices have been adjusted for subsequent stock splits.) Rounding to the nearest whole share, the $100 would have bought 60 shares. By the end of the year, the stock price fell to $1.02 a share, and the value of the position shrank to $61.20.
Compare Apple's performance to a stock market index to see how it compares with the overall market or sector. Two appropriate indexes are the NASDAQ Composite Index, which includes many technology companies, and the S&P 500, which is representative of large-capitalization companies. If you had chosen to place the money in a passive index, you would have fared better over a one-year period. Your $100 would have been worth $67.48 if you had invested it in an index fund tracking the NASDAQ Composite Index or $76.20 if you had invested it in an index fund tracking the S&P 500.
The next four years were far more lucrative for Apple's investors. Apple introduced new products, such as more advanced versions of the iPod. The value of the $100 investment climbed to $727.20. This is much better than the outcome for that $100 investment in an S&P 500 Index fund ($122.83 at the end of 2006), and the NASDAQ Composite ($122.03 at the end of 2006).
Gains Continue
The next five years, from 2007 through the end of 2011, included the introduction of the iPhone. The first generation was released in June 2007, with subsequent versions released in the ensuing years. In 2007, Apple's share price more than doubled. It reached $28.30 on Dec. 31, 2007, and the value of the $100 investment had grown to $1,698.
Investors were pleased by Apple's performance over the next few years. The following year, 2008, was rough for the stock, but the ensuing period through 2011 more than made up for it. On the last trading day of 2011, December 30, the stock price closed at $57.86. There was plenty to cheer about heading into the new year. Over the previous decade, the original $100 investment would have grown to $3,471.60.
Still Feeling Good in the Present
Apple generated tremendous free cash flow thanks to its success. This boosted cash and marketable securities, with it reaching $205.7 billion at the end of fiscal 2015. It was $81.6 billion at the end of fiscal 2011.
This allowed Apple to return cash to shareholders by initiating a dividend and buying back shares. The board of directors first declared a 38-cent dividend in 2012, which has grown to the current level of 52 cents per quarter.
Apple's stock closed at a price of $97.34 on Jan 29, 2016. The final tally means the $100 invested at the start of 2002 is worth $5,840.40. However, aside from price gains, investors also benefited from more than three years' worth of dividend payouts. This totals $379.26 and equates to a total value of $6,219.66 when factoring in both stock price gains and dividends, assuming the dividends are not reinvested.
Beating Passivity
This value is well ahead of a passive investment in either the S&P 500 or NASDAQ Composite. Based purely on price, the $100 investment in the S&P 500 would be worth $168.03. The same amount put into the NASDAQ Composite would have left an investor with $233.12. Although the totals climb by a few hundred dollars when dividends are added, it is still not even close to the value of the $100 Apple investment.
Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation.
0 comments:
Post a Comment