If I’d invested £1,000 in Apple shares 10 years ago, here’s how much I’d have now

Apple (NASDAQ:AAPL) is Warren Buffett’s biggest investment Berkshire Hathaway stock portfolio. And Apple stock has been a good investment for the past decade.

If I invested £1,000 in Apple shares 10 years ago and reinvested the dividends I received, I would have an investment with a market value of £13,555 today. I think this is a significant gain.

Many are yielding as Apple’s share price has risen – the company’s earnings per share (EPS) have gone from $1.42 to $6.11. But why does this happen and can it continue?

Revenue and profit

The first reason Apple stock is more expensive today is that the company is making more money. This is a result of higher profits and profits.

Revenue growth at Apple comes primarily from product divisions. iPhone sales, in particular, have grown at just over 8% annually over the last decade and make up 47% of total revenue.

Even so, the iPhone only accounts for about 16% of new phone shipments worldwide. That gives reason to think there is still room for growth and that Apple’s revenue growth can continue.

Despite inflation, Apple’s profits have been helped by increasing margins over the past 10 years. This is the result of growth in the company’s high-margin services division.

A decade ago, services accounted for 9% of revenue. Today, that figure has risen to 21%.

The perennial antitrust issue appears to be the biggest obstacle to this trend continuing. But as long as Apple has been allowed to continue with the way of opening its App Store, I am optimistic on this front, too.

Dividends and buybacks

Another reason Apple stock is more valuable today is that the company has increased shareholder returns. This has come through dividends and share buybacks.

Apple’s dividend has risen from $0.41 in 2013 to $0.90 today. And with the company’s dividend at just 13% of free cash flow, I think it can grow again.

At current prices, the dividend yield on Apple stock is just 0.6%. Stock buybacks have contributed more to the company’s shareholders.

Over the past 10 years, Apple has dropped its stock by 37%. That means each remaining share has a greater claim on the company’s total earnings.

I expect the pace of stock buybacks to slow down in the near future. Apple has been using excess cash to buy back shares, and the amount of excess cash on its balance sheet has been reduced.

Despite this, I still expect the company to repurchase shares at a significant price using cash generated from operations.

Stocks to buy

Apple stock has been an excellent investment for Warren Buffett and Berkshire Hathaway shareholders. And the future is looking bright for me too.

I think the company will grow more slowly going forward as the pace of stock buybacks slows. But I expect the business to continue to grow and I buy shares for my portfolio.