Apple Inc. (NASDAQ:AAPL) continues to weigh on the S&P 500 and the rest of the markets as they take off, leaving it in the dust. Many had pegged the company’s stock as the main engine of growth during the recession, but today the rest of the market is growing while Apple Inc. (NASDAQ:AAPL) lags far behind.
Apple And The S&P 500
The S&P 500 is up 15.9 percent, just 1 percent under the index’s high. The NASDAQ has hit a peak in the current market, soaring to heights that haven’t been seen since 2000. Apple Inc. (NASDAQ:AAPL) however, is going in the opposite direction, losing 21 percent of its value so far year to date. If Apple hadn’t been part of the S&P 500, then it would have gained 17.4 percent, according to the S&P Dow Jones Indices.
ValueWalk's Raul Panganiban interviews William Burckart, The Investment Integration Project’s President and COO, and discuss his recent book that he co-authored, “21st Century Investing: Redirecting Financial Strategies to Drive System Change”. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors.
USA Today’s Matt Krantz reports that most of the investors who still have money in Apple right now are individual investors. The analysts he spoke with say institutional investors are getting out of the stock and moving on to other better performing tech stocks like Amazon.com, Inc. (NASDAQ:AMZN) and Priceline.com Inc (NASDAQ:PCLN), which are rapidly replacing Apple as market leaders.
Fallout From Apple’s Decline
According to Krantz, Apple Inc. (NASDAQ:AAPL)’s poor stock performance this year has greatly affected its overall standing within the markets. The company was such a major part of Wall Street a year ago that analysts had to include the stock when they were looking at the market. The company took over the NASDAQ 100 and made up for over 20 percent of its value in 2011.
This year Apple Inc. (NASDAQ:AAPL) is also expected to bring in less than 3 percent of the S&P 500’s earnings, while in the fourth quarter of 2011, it bright in 6 percent of the index’s earnings. The tech sector as a whole is also performing poorly, but Apple Inc. (NASDAQ:AAPL) shoulders all of the blame. Right now the sector is down 1.3 percent, but the S&P 500 Dow Jones says that without Apple, it would have risen 11.4 percent.
Analysts note that other stocks are rapidly replacing Apple. In addition to other tech stocks taking over, financial stocks have also begun to lead the market. The Russell 1000 index, which is made up of smaller stocks and don’t include Apple Inc. (NASDAQ:AAPL), soared to another new high on Wednesday.
Apple Tries To Make Up For Poor Stock Performance
Of course Apple Inc. (NASDAQ:AAPL) has tried to make up for its poor performance by increasing its dividends, largely thanks to efforts by David Einhorn, who urged the company to increase its capital return efforts. Bloomberg’s Adam Satariano and Shin Pei report that tech companies are paying dividends at the quickest rate in over 10 years, with Apple and also Cisco Systems, Inc. (NASDAQ:CSCO) leading the way.
Tech companies in the S&P 500 paid $10.8 billion in dividends in the last quarter, compared with $5.1 billion in the same quarter three years ago. In the previous quarter, they paid a record $11.9 billion, according to Bloomberg data. The tech sector’s average dividend yield is now at 1.21 percent, and this is the first time it has passed 1 percent in 15 years or more.
In 2012 Apple Inc. (NASDAQ:AAPL) paid its first dividend in almost two decades, although the dividend didn’t really affect the company’s cash hoard, which rose to $137.1 billion at the end of 2012, raising the ire of Einhorn and other investors. It’s worth noting that the April announcement in which Apple Inc. (NASDAQ:AAPL) revealed that it would raise its capital return plan to $100 billion came on the same day the company recorded its first profit decline in 10 years.