Could Apple Become a Top Dividend Stock?

Apple (NASDAQ:AAPL) stock has been really crushed in recent sessions, thanks to tariff threats and news regarding delays with Apple Intelligence updates. Undoubtedly, Trump’s tariff talks have put a considerable amount of pressure on financial markets in recent weeks.

And while Apple had seemingly been a great place to dodge most of the tariff-related jabs in previous weeks, thanks in part to the company’s ambitious plan to spend $500 billion in the U.S. in four years — which may give the company a better shot to sidestep the heavy blow of tariffs — this week’s rough trading clearly shows us that the iPhone titan may not be as “safe” a way to sidestep the tariff-fueled slide.

On Wednesday’s recovery session, which saw the Mag Seven stocks bounce back after a tough couple of sessions, Apple shares plunged by 1.75%. For the week, AAPL stock is off close to 8%. The relative resilience in the earlier part of the market sell-off now doesn’t mean a whole lot. 

Apple stock slumps on AI delays, tariff fears, broad market headwinds, and more.

Indeed, the latest leg lower seems to have more to do with AI delays and valuation. However, the impact of China tariffs and the impact on the spending patterns of Chinese consumers remains something to ponder. Even though Apple is spending significantly to advance its AI efforts over the next four years, the company still seems well behind in the AI race. And the latest delay seems to suggest it’s a bit farther behind than many of us may have expected. 

The AI-driven iPhone super-cycle now seems a bit doubtful for this year, given news that some AI features are being pushed into 2026. Either way, I don’t think the delay is a big deal for long-term investors. What difference does a year really make if you’re committed to holding for five years or more?

The iPhone installed base is still aging. And once the AI features (and most importantly, a Siri LLM that could step into the shoes of ChatGPT) finally do arrive, the updates will likely naturally follow, whenever that may be. Indeed, the latest leg lower, I believe, is primarily due to impatience on the part of investors. While the next year could be a bit of a slog, I still think Apple stock’s worth hanging onto, even if the super-cycle gets pushed further out.

Arguably, it’s much better to get truly polished AI later on. Apple is fine not being first when it comes to emerging technologies. And given the low risk that the AI delay will cause iPhone users to switch to Android, I’d argue that Apple can and should take all the time it can to polish Apple Intelligence. 

Remember, at the end of the day, it’s the best product (AI phone) that will win the long game.

Apple isn’t a top dividend stock; but it is a great dividend growth stock.

In the meantime, investors should feel content collecting the dividend, which now yields 0.45%. Sure, the yield may seem rather small, but it’s worth noting that the company has spoiled investors with generous dividend hikes every year for more than a decade. Given the low yield, I do not view Apple as a top dividend stock. However, I do view it as a fantastic dividend growth stock to stash away for the long run.

With such a low dividend payout ratio, an argument can be made that there’s more room for further generosity with dividend growth, especially if revenue growth slows. 

At the end of the day, Apple pulls in vast sums of cash. That said, it’s also spending a hefty sum on the next generation of growth projects ($500 billion in U.S. investments in four years is nothing to sneeze at). Given this, I think Apple will find the right balance in investing in future drivers and rewarding shareholders (whether through dividend hikes or share repurchases). 

The bottom line

In due time, I do believe Apple will get AI right. And when it does, the company’s sales growth and cash flows stand to get that much stronger. With shares going for a relatively pricey 34.5 times trailing price-to-earnings (P/E), I believe that dividend hikes may be better than further share repurchases moving forward, given buybacks tend to give more bang for the buck at times of undervaluation.

But as for Apple becoming a “top dividend stock” with a yield markedly above the historical average, I wouldn’t get my hopes up for such.

Revenue growth estimates for the year ahead seem too conservative, especially on the back of AI delays. Once 2026 rolls around, I think Apple is well on its way to becoming a growth stock again.

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