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A Must-See Chart for Apple Investors

By Brian Withers and Brian Stoffel – Updated Jun 25, 2021 at 1:52PM

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A consistent approach has produced a jaw-dropping result.

Apple (AAPL -1.96%) has become a massive company any way you measure it. And yet it is still posting impressive growth on the top and bottom lines, fueled in part by consumers upgrading home computer gear during the coronavirus. On a Fool Live episode recorded on May 26, Fool contributors Brian Stoffel and Brian Withers discuss the highlights from the iPhone maker's most recent quarter and share a must-see chart for shareholders.

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Brian Withers: Apple. Apple just had another amazing quarter and this quarter didn't even include benefits from its new announcement. These colored iMacs, the iPad Pro, the purple iPhone 12, and their must-have accessory air tags. But this quarter overall reminded me that Apple is really, truly a global company.

Overall revenue was up 54%, but Americas was only up 35%, which means the non-Americas revenue skyrocketed 69%. They had record revenue in each of the geographic segments. Mac and services delivered all-time record results. The Mac, which has been fueled by its M1 chip for a while now, has set all-time records continuing its momentum for the product category. Tim Cook said, in fact, "the last three quarters for Mac have been the three best quarters for Mac ever."

Coronavirus is a huge tailwind for the company as home-bound consumers upgraded technology and this is without stores even being open. I went to my local Apple Store hoping that I could just walk in and browse around and I needed an appointment. This was just a couple of weeks ago. These results, it allowed them to generate operating cash flow of $24 billion and return nearly $23 billion to shareholders just during the quarter. I think Apple's still got its mojo.

Brian Stoffel: I was on mute there, now I'm off mute. Apple, world's biggest company. You just said $23 billion returned to shareholders. I'm curious, how did they return it? How do you feel about that? It can be in dividends and buybacks. Do you prefer one over the other? Personally, I like dividends, but that's just me. What do you think about all of that?

Withers: Yeah, if you're going to return stuff to shareholders for me, I would like to see it in dividends or maybe even a one-time payout to shareholders. Of the $24, $23 billion to shareholders, $3.4 billion of that was in dividends and $18.5 billion was in share buybacks. Now, share buybacks aren't my most exciting way for companies to invest money. I look to see what its R&D budget was, well, they spent over $5 billion in R&D in the quarter. With its focused set of products, spending, what? $20 billion run rate in R&D, I think that's a pretty massive investment for R&D.

But I did a quick look at share buybacks, and interestingly enough, over the last decade, drum roll, please. Shares have dropped. This is exactly the slide. This is exactly the trend that you want to see. It's down 35% over the last decade.

Stoffel: That is enormous.

Withers: Yeah, that's pretty impressive.

Stoffel: Wow, if I were better at math, I'd figure out what percent, because it's not 35% of the gains then. It's something even more than that that it accounts for yeah.

Withers: Yeah. I think their consistent approach to buying back stock and committing to it over time rather than just when the whim strikes them, I think has been a really positive impetus for the share price.

Stoffel: I stand corrected that was an impressive slide, to see that much of share count reduction, because obviously, then that pushes the price up even more.

Brian Withers has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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