I recently bought an iPhone 12 because my iPhone X of about 4 years just died on me and the AppleCare has expired. Each time I buy an iPhone, I have hopes that it will last me a long time, way beyond the AppleCare warranty period. But maybe I’m just overly optimistic.
A 256GB iPhone 12 with AppleCare set me back by a whooping S$1,808. It was not something I couldn’t afford, but I always wished that this was money that I could have used on buying more stocks instead, like Apple shares. With S$1.8K (or ~US$1340), I could have bought 9 Apple shares at ~US$140 (based on recent price for AAPL), with some change to spare.
But it got me thinking further. How many Apple shares do I have to own so that I can rely on only the dividend payout to buy myself an iPhone? To do that calculation, we will need a quick dive into Apple’s dividend policy and historical payout.
From the website, we can see that Apple paid dividends since 1987, and then had a long hiatus between 1996 and 2011, before resuming again since 2012 up to today. There were a number of stock splits along the way and the split-adjusted dividends have been increasing over the years. We shall concern ourselves with the period from 2012 onwards, where we see quarterly payouts and we can assume that these will not stop anytime in the near-term given that earnings and free cash flow are expected to increase or remain stable. In fact, it’s more likely to continue increasing!
Using the latest cash dividend payout on 10 May 2021, at US$0.22 (or US$0.88 per year), and knocking off 30% withholding tax, that’s US$0.154 per quarter, or US$0.616 per year. Now working backwards, in order to have enough dividends for an iPhone in a year, I need just 1340 / 0.616 = 2175 AAPL shares, which amounts to US$3.05M based on AAPL’s current price.
And I’m probably thrifty enough to only be changing my iPhone once it spoils, which hopefully means that it can last at least 3 years. So 2175/3 = 725 AAPL shares (~US$1m) is just enough to do the trick! Probably fewer if we account for the rising dividends given the historical trend.
It’s impossibly high, but that’s mostly because of AAPL’s abysmal dividend yield at 0.6% and effective dividend yield at 0.4% (after taxes). For comparison, the FIRE movement is based on a more realistic 4% yield.
The conclusion is obvious: AAPL is not ideal in relying on for dividends or for your next iPhone for free. But it’s been doing what it’s supposed to do as a growth stock, so I have no complaints about AAPL.
This was a fun exercise. I constantly think about the opportunity costs of my purchases and think about a future where I will have enough capital to generate returns that cover those purchases. So this helps to put some structure in. It doesn’t have to lead to anything eventually, but just gives some food for thought.
The same computation can also be adapted for anything from a Samsung TV to a Nintendo Switch. Of course, it only applies if the company pays a dividend to begin with, else you will have to eventually sell the shares (aka kill the golden hen) just to realise your capital gains.
Disclaimer: As of writing, I am invested in AAPL.
Making Cents 
One thought on “How many Apple shares for an iPhone?”