Apple Inc., dividends per share (DPS)

YearValueDPSt or Terminal value (TVt)CalculationPresent value at 13.14%

0DPS01 3.00

1DPS14.00= 3.00 (1 + 33.43%) 3.54

2DPS25.13= 4.00 (1 + 28.04%) 4.00

3DPS36.29= 5.13 (1 + 22.65%) 4.34

4DPS47.37= 6.29 (1 + 17.26%) 4.50

5DPS58.25= 7.37 (1 + 11.88%) 4.45

Terminal value (TV5) 732.27 = 8.25 (1 + 11.88%) (13.14% - 11.88%) 395.07

Intrinsic value of Apple Inc.'s common stock (per share)

$415.90

Current share price$266.37

Based on: 10-K (filing date: 2019-10-31).

Dividend growth rate (g) implied by PRAT model

Apple Inc., PRAT model

Average

Sep 28, 2019

Sep 29, 2018

Sep 30, 2017

Sep 24, 2016

Sep 26, 2015

Sep 27, 2014

Selected Financial Data (US$ in millions)

Dividends and dividend equivalents declared

14,129

13,735

12,803

12,188

11,627

11,215

Net income

55,256

59,531

48,351

45,687

53,394

39,510

Net sales

260,174

265,595

229,234

215,639

233,715

182,795

Total assets

338,516

365,725

375,319

321,686

290,479

231,839

Shareholders' equity

90,488

107,147

134,047

128,249

119,355

111,547

Financial Ratios

Retention rate¹

0.74

0.77

0.74

0.73

0.78

0.72

Profit margin²

21.24%

22.41%

21.09%

21.19%

22.85%

21.61%

Asset turnover³

0.77

0.73

0.61

0.67

0.80

0.79

Financial leverage⁴

3.74

3.41

2.80

2.51

2.43

2.08

Averages

Retention rate 0.75

Profit margin 21.73%

Asset turnover 0.73

Financial leverage 2.83

Dividend growth rate (g)⁵

33.43%

Based on:10-K (filing date: 2019-10-31),10-K (filing date: 2018-11-05),10-K (filing date: 2017-11-03),10-K (filing date: 2016-10-26),10-K (filing date: 2015-10-28),10-K (filing date: 2014-10-27).

2019 Calculations

¹

Dividend growth rate (g) implied by Gordon growth model

g= 100 (P₀r-D₀) (P₀+D₀)

= 100 ($266.3713.14%- $3.00) ($266.37+ $3.00) =11.88%

where:

P₀= current price of share of Apple Inc.'s common stock

D₀= the last year dividends per share of Apple Inc.'s common stock

r= required rate of return on Apple Inc.'s common stock

Dividend growth rate (g) forecast

Apple Inc., H-model

Year Value g_t

1 g₁ 33.43%

2 g₂ 28.04%

3 g₃ 22.65%

4 g₄ 17.26%

5 and thereafter g₅ 11.88%

DeclaredRecordPayableAmountType

October 30, 2019November 11, 2019November 14, 2019$.77Regular Cash

July 30, 2019August 12, 2019August 15, 2019$.77Regular Cash

Apr 30, 2019May 13, 2019May 16, 2019$.77Regular Cash

Jan 29, 2019Feb 11, 2019Feb 14, 2019$.73Regular Cash

Nov 1, 2018Nov 12, 2018Nov 15, 2018$.73Regular Cash

Jul 31, 2018Aug 13, 2018Aug 16, 2018$.73Regular Cash

May 1, 2018May 14, 2018May 17, 2018$.73Regular Cash

Feb 1, 2018Feb 12, 2018Feb 15, 2018$.63Regular Cash

Nov 2, 2017Nov 13, 2017Nov 16, 2017$.63Regular Cash

Aug 1, 2017Aug 14, 2017Aug 17, 2017$.63Regular Cash

May 2, 2017May 15, 2017May 18, 2017$.63Regular Cash

Jan 31, 2017Feb 13, 2017Feb 16, 2017$.57Regular Cash

Oct 25, 2016Nov 7, 2016Nov 10, 2016$.57Regular Cash

Jul 26, 2016Aug 8, 2016Aug 11, 2016$.57Regular Cash

Apr 26, 2016May 9, 2016May 12, 2016$.57Regular Cash

Jan 26, 2016Feb 8, 2016Feb 11, 2016$.52Regular Cash

Oct 27, 2015Nov 9, 2015Nov 12, 2015$.52Regular Cash

Jul 21, 2015Aug 10, 2015Aug 13, 2015$.52Regular Cash

Apr 27, 2015May 11, 2015May 14, 2015$.52Regular Cash

Jan 27, 2015Feb 9, 2015Feb 12, 2015$.47Regular Cash

Oct 20, 2014Nov 10, 2014Nov 13, 2014$.47Regular Cash

Jul 22, 2014Aug 11, 2014Aug 14, 2014$.47Regular Cash

Apr 23, 2014Jun 2, 2014Jun 9, 2014*N/A7-for-1 Stock Split

1.What is Apple Inc.'s stock price using the dividend-discount model?

1. What is Apple Inc's current dividend?

3.Analyze/ estimate Apple Inc's growth rate for the next five to ten years, or the formula "g=ROE x b".

1. Use the estimate of the cost of equity in the WACC for the rE part of the formula: Combine the above information into the dividend-discount model (DDM).
2. Compare The result to the current market price of Apple Inc's stock.
3. Provide analysis and an explanation of how they compare and explain any differences you observe