Most people, especially income-oriented investors, overlook the power of a sub-1% dividend yield. That said, what’s even more powerful is the dividend growth potential as well as share buybacks. And on both fronts, shares of Apple (NASDAQ: AAPL), I think, deserve an A-grade. As to whether it’s deserving of a TFSA right here remains the big question. While a single-digit per-year dividend raise isn’t much to write home about, I do think that the buyback is the biggest reason to own the shares.
Over the years, the firm has poured billions of dollars into repurchasing shares, usually at times of undervaluation. As shares look to make new highs following the latest keynote, which unveiled the latest iPhone 18 and foldable iPhone Duo models, perhaps Apple might wish to be a bit more generous with its dividend growth.
Any way you look at it, the stock is starting to look quite timely again, even as investors get over the initial sticker shock from the latest line of devices. Indeed, the prices are high, but at the same time, the American employment picture is looking quite robust. With the iPhone Duo starting at a whopping $2,999.99 in Canada, it feels like the foldable doesn’t have a shot at being anything more than a niche product.
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Apple’s dividend might be an afterthought. But the shares look magnificent for the gains and buyback potential
Given favourably early reviews, though, my guess is that the Duo has all the makings of a hit product that could help fuel a mini multi-year supercycle. Of course, paying north of $3,000 for a phone (you do not want to know how much the 2TB version is) might seem like a stretch. But when you consider that many Apple users have been waiting for such a product and the fact that DRAM and NAND (memory) prices have been through the roof, my guess is that the consumer will be quite willing to absorb the hit.
Indeed, inflation has pretty much become normalized since the reopening after COVID lockdowns. And with AI-driven memory inflation colliding with high oil prices and recently imposed counter-tariffs on select U.S. goods, it feels like there might be a rush to invest in the latest and greatest before things have a chance to get even pricier. Memory chips are showing no signs of slowing down, with the potential for things to get worse going into 2027 and 2028. Any way you look at it, Apple stands out as a solid pick for a TFSA.
The 0.4% dividend yield, made lower by a U.S. dividend withholding tax in a TFSA, acts as the mere sprinkles on top of a fantastic capital appreciation story, which, if held in a TFSA, would be best as new CEO John Ternus steers the company into uncharted waters. Whether on-device AI and foldables like the iPhone Duo can do the trick, though, remains the big question.
The bottom line
At 36.1 times trailing price-to-earnings (P/E), the name doesn’t come cheap. But, in my view, the foldable device may very well be what propels the form factor into the mainstream. Who knows? Maybe that second screen is a must when it comes to interacting with next-generation hyper-personalized AI.
