By Nicholas Zelinsky,
Money and Investing Writer
Apple Inc. (NASDAQ: AAPL) has made some large strides recently that has propelled their stock into the heat of discussion.
With the recent update of iOS 9, and the release of their new installment plan, Apple is starting to look more and more like an annuity business.
Currently priced at around $115 per share, Apple has a dividend yield of $1.82 per share, coming in with a dividend rate of 2.08 percent.
With the new iPhone plan, consumers will now be able to in a sense, lease iPhones for two years, and then trade them in for a new phone and start the payments all over.
This installment plan will provide Apple with an increase in steady income, and provide investors with more security while investing in their stock.
This sense of security could draw more people to Apple stock and drive the price of each share up.
If listed as an annuity business, Apple Inc. could reach a trading value of $200 per share.
Other annuity business include MetLife (NASDAQ: MET), Prudential (NASDAQ: PRU), and the Allstate Corporation (NASDAQ: ALL) to name a few.
Apple has a long way to go to get to $200 per share, and this new plan is not going to skyrocket the stock to new heights in a matter of days. People are still hooked into their two year plans, limiting the amount of consumers available to apple at the moment.
However, this new plan does give Apple that potential, and is drawing the eyes of many investors.
As of right now, Apple puts 22.31 percent of their net income towards dividends for investors.
If this plan Apple releases does eventually take off, Apple could go one of two ways.
One plan Apple could have is to reinvest that extra income into themselves, and developing new software and hardware, trying to help bring the price of their stock up.
The other route Apple could take is putting that money towards dividends for investors, which would make their stock more appealing to more investors.
For investors, this means Apple would become a more secure investment for their future.
Many times, people invest in annuity stock as a sort of supplemental income for their retirement; a steady flow of earnings they can rely on every year, quarter, or however often the company pays out dividends.
With Apple starting to resemble an annuity stock more and more with their new releases, they could start to attract long-time investors, which will bode well for their company in the long run.
The stock market is glorified, professional gambling.
There are stocks that appear to be safe, like going red or black on the craps table, and you can look for the big money by buying low and hoping it goes high.
Apple has made their way from looking like any number on the craps table, to something similar to going red or black.
Projections put Apple in the category with other companies that are considered to be safe investments for steady annuity payments.
Although Apple is nowhere near where their stock is projected to be, Rome was not built in a day.
A version of this article appeared in the Tuesday, September 22nd print edition.
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