Would you sell AAPL?

In April 2013 I purchased 9 shares of Apple at $401.76 per share. I thought they were cheap then and continue to feel that way now. At the time, I was earning a yield of 2.62% and making $95.40 in dividends per year. I still consider Apple a growth stock…the dividends are just a bonus. After a dividend increase and some minimal dividend reinvestment, I was up to $111.88 per year in dividends. Not too bad.

Near Christmas time this year I was fortunate enough to receive 20 shares of Apple. These shares were initially purchased in 1996 and have an incredible cost basis of $6.10!! At the time it cost about $122 to purchase those 20 shares. At today’s closing price of 543.93, those same 20 shares are worth $10,880.

What should I do with those shares? If I were to sell today, I would have to pay 15% long term capital gains taxes of over $1600. Largely because of this I’ve elected to hold onto them. Apple stock now makes up about 23% of my investments, way too much for my tastes. But, rather than sell, I’ll just add more capital to other investments until it is evened out.

I’m now also earning $355.88 per year in dividends. I will continue to reinvest and let that compounding work. The amazing thing about the dividends is that my yield-on-cost is currently 9.31% ($12.20/$130.98). However, if you consider that the initial 20 shares cost only $122, those 20 shares contribute a whopping $244 in dividends, twice the initial investment!

Fortune just published an article in the Wall Street Journal comparing Apple versus Amazon versus Google. The conclusion? Apple is more valuable than either company by every measure but Wall Street’s sentiment.

Apple vs Amazon vs Google

Apple vs Amazon vs Google

Full Disclosure: Long AAPL

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