This Is the Best Dividend Stock Among the 'Magnificent 7'

The Magnificent Seven Stocks have been the heroes this year, sending the broader indices to fresh all-time highs. If you can find a Magnificent Seven stock that also pays a dividend, you are living large. Technology stocks require a tremendous amount of capex, but they are increasingly jumping into the dividend fray, following in the footsteps of iPhone maker Apple (Nasdaq: AAPL).

You would be hard-pressed to go wrong with any of the Magnificent Seven stocks that pay dividends, including the latest additions to the dividend party, Meta (Nasdaq: META) and Alphabet (Nasdaq: GOOGL). But Apple has been making distributions for over a decade and therefore has been an early mover among growth stocks to do so. Apple CEO Tim Cook in 2016 committed to raising the company’s dividend on an annual basis, and the company’s strong fundamentals have resulted in an attractive dividend growth rate of almost 7% over the past five years.

Dividend History

Apple stock has been paying steady dividends to investors since 2012. The technology giant recently increased its quarterly distribution by 4.1% to $0.25 per share, for a dividend yield of 0.48%. When you combine this with the stock’s capital appreciation, including a year-to-date increase of over 11%, Apple is rewarding investors all the way around.

With a $3.2 trillion market cap, Apple is one of the most valuable companies on the planet. Apple boasts $162 billion in cash on its balance sheet and $105 billion in debt. Apple’s iPhone, a cash cow for the company, generated $46 billion in Q2 revenue, a 10% year-over-year decline on tough comps. With the iPhone 16 seemingly around the corner, there’s reason to expect fresh demand.

The company has a history of prioritizing shareholder value, including a massive $110 billion share buyback announced earlier this year, setting a record as the biggest stock repurchase program in corporate America’s history. A $10,000 allocation to Apple stock would deliver $500 in passive income this year.

AI Ambitions

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While investors have been waiting to learn how Apple was going to capitalize on the artificial intelligence bonanza, the company has finally tipped its hand to its ambitions. Apple has partnered with OpenAI, which is behind the original chatbot star, ChatGPT. Through the deal, Apple will integrate OpenAI’s ChatGPT capabilities into its suite of products, including iOS, iPadOS and macOS, giving users an opportunity to access the chatbot from their devices. Apple’s digital assistant Siri will also be able to harness ChatGPT’s technology. This partnership catapults Apple ahead in the AI race. Plus, Apple is reportedly in talks with Meta about striking up their own AI partnership.

Should You Buy Apple Stock in 2024?

Nearly two-dozen Wall Street analysts have assigned a “buy” rating on Apple stock while only one analyst has a”sell” rating attached. Most analysts believe the stock is fairly valued at $211 per share, with an average price target of $212. However, on the higher end of the range, forecasts reach as high as $275, a bullish prediction offered by analyst firm Wedbush.

While Apple stock is up by a double-digit percentage this year, it has underperformed when compared with some of its Magnificent Seven peers. As a result, investors might find a buying opportunity in AAPL stock if they believe that the momentum will continue for the rest of this year and that there are more upside catalysts than there are downside risks.