With a dividend yield of just 1.7%, Apple (NASDAQ:AAPL) certainly doesn't look like a screaming buy for investors looking for income. But a closer look reveals there are several good reasons dividend investors should bet on Apple as a dividend stock, despite its unimpressive dividend yield. Indeed, in a rosy market, when reasonable valuations are hard to come by, Apple could very well be one of the best dividend stocks on the market.

Here are three reasons Apple is a top dividend stock.

The outside of the Apple Store in the Upper West Side of New York City.

Image source: Apple.

Apple is a free cash flow monster

Apple's dividend is as safe as they come. Not only is it backed by a massive $256.8 billion cash position when adding in Apple's marketable securities, but the tech giant is raking in boatloads of free cash flow every year. In the trailing 12 months, for instance, Apple's free cash flow (operating cash less capital expenditures) was about $53 billion. 

Apple's free cash flow is well beyond what the tech giant needs to sustain its dividend. Of its $53 billion in free cash flow during the past 12 months, Apple paid out just $13.4 billion in dividends.

Apple is raising its dividend every year

With annual free cash flow so much higher than Apple's dividend payments, it's no surprise that the company has raised its dividend every year since initiating it in 2012. Since 2012, Apple has increased its dividend by an average of 10.7% annually. 

Unsurprisingly, Apple's most recent annual dividend increase was a solid 10.5%, highlighting management's ongoing commitment to its dividend.

Investors can continue to expect Apple to keep increasing its dividend. Not only does the tech giant have the finances to do it, but management has indicated it plans to increase its dividend every year

Apple stock is undervalued

Interestingly, this third reason Apple is a top dividend bet for income investors has nothing to do with the dividend itself. This point focuses on the overall value of the stock. In this long bull market, many stocks are trading at valuations that seem to price in all best-case scenarios. But Apple stands out as a welcome exception to these frothy valuations. While dividend investors are, indeed, on the hunt for income, dividend payouts are of little value if there's significant risk to the stock price at which a security is bought.

The front of an Apple store in Santa Monica, California.

Image source: Apple.

Consider Apple's price-to-earnings ratio of 17. Not only is it well below the average price-to-earnings ratio of stocks in the S&P 500 of 24, but it is also conservative in relation to Apple's prospects for earnings-per-share growth. In Apple's most recent quarter, the company's earnings per share increased by 10.5% year over year. And with the help of share repurchases, which Apple can easily afford thanks to its formidable free cash flow, there's no reason Apple can't continue to increase its EPS by a similar rate over the long haul. Indeed, on average, analysts expect Apple's EPS to increase by about 11.1% annually over the next five years.

In a market where it's getting tougher to justify dividend stocks' valuations (especially in tech), Apple seems like a top pick for investors looking to juice their income from individual stocks.