Apple (NASDAQ:AAPL) has had a tremendous run over the past several years, but it hasn't been without a certain amount of drama. Between early 2017 and mid-2018, the stock nearly doubled, and Apple became the first U.S. public company in history to surpass a market cap of $1 trillion.

Soon after, however, things turned south. Fears about slowing iPhone growth, the trade war with China, and a year-end stock market correction to close out 2018 caused Apple's stock to lose nearly a third of its value -- and make it a bargain in the process. Apple took advantage by buying back a boatload of its shares.

Over the past year, the stock has once again soared, and with that recent run up, it's no longer the screaming value it once was. As a result, Apple is likely considering scaling back its massive share buybacks in favor of a bigger dividend increase.

Multiple glass jars with money growing over time

Image source: Getty Images.

The times they are a-changin

Apple has been aggressively buying back shares in recent years and announced an additional $75 billion share repurchase authorization in April 2019. That came less than a year after the company revealed a $100 billion buyback in May 2018. The company's aggressive stock repurchase plan has been a boon to investors, as Apple has retired nearly 17% of its shares since early 2017.

Over the past year, many of the factors that weighed on Apple stock have abated, renewing investor confidence in the company, which in turn has caused the stock to soar. The U.S. and China reached an initial trade deal, iPhone sales have improved, and the S&P 500 notched 29% gains to close out 2019.

Those factors have no doubt buoyed Apple's stock, which has more than doubled over the past 12 months.

No longer cheap?

Legendary investor Warren Buffett, whose Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) owns about a 5.6% stake in Apple stock, hasn't been bashful about his feelings on the company's share repurchase program, saying he's "wildly in favor of it." In an interview early last year, Buffett said: "[W]hen they repurchase shares, our interest goes up and we don't lay out a dime. I love it."

Buffett has his limits, though, preferring to buy when the shares are inexpensive. "We're way better off, you know, if it's at a lower price when they're repurchasing shares ... The worst thing that can happen from our standpoint with Apple is that it sells at $230 or something like that because we don't like buying as well at that sort of price." It's worth noting that Apple shares are currently fetching nearly $300 per share -- so even Buffett's not buying at this level. 

In early 2019, Apple shares were valued at less than 12 times trailing 12-month earnings, a compelling level not seen since July 2016. Apple jumped at the chance to buy its shares on the cheap, spending more than $67 billion and retiring nearly 339 million shares in fiscal 2019. 

Those days of cheap stock repurchases are now in the rear view mirror. Just as Apple's share price doubled in 2019, so has its valuation, now sporting a price-to-earnings ratio of more than 25 -- and nearly 23 times forward earnings.

Apple CEO Tim Cook on stage with the iPhone 11 Pro on screen in the background.

Apple CEO Tim Cook. Image source: Apple.

A bigger dividend hike?

Apple typically announces changes to its capital return program in April of each year, so the company is likely contemplating what it will do for 2020. With its massive stock price increase over the past year, Apple shares now yield about 1%, falling far behind the average yield of 1.77% for the S&P 500. 

This might be a good time for Apple to throttle back on its share buybacks in lieu of a more sizable dividend boost. That's not to say the technology specialist's dividend hasn't been generous. The company has increased its payout by over 100% since it reintroduced its quarterly dividend in mid-2012. 

Apple spent just $14.1 billion on its dividend in fiscal 2019, so it could easily double the payout, which would boost its yield to 2%. The company could scale back on the massive $67 billion it spent on share repurchases last year and use that to fund the higher dividend.

While there's no way to know for sure what Apple's board will do when it announces its updated capital allocation plan in April, investors might just be in for a pleasant surprise -- in the form of a juicier dividend.