Portfolio Manager Kenneth Conrad of BMO Global Asset Management bases his investment philosophy on finding yield, and Apple Inc. (AAPL) is a prime example of where he is succeeding in that strategy, as the company has seen a 2.2% yield in the last year, which Conrad expects to increase.
“Apple didn’t have any yield two years ago. And then, since last year, it’s a top 10 holding, has a 2.2% yield and about $20 billion in net cash. We expect that yield to increase over time, and it scores incredibly well in our model,” Conrad said.
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Conrad says there are a lot of ways to win with Apple. The company is revamping current products and have repurchased approximately $40 billion worth of stock, and Conrad believes they may add a new buyback in the future.
“They have a new form factor coming out for their phone; it’s going to be a larger phone. It appears that they’re revamping their Apple TV product,” Conrad said. “In the last year or so they’ve repurchased about $40 billion worth of stock out of their $60 billion authorization, and we wouldn’t be surprised if they add a new buyback after that, plus we are expecting a dividend increase.”
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