Dividend draft: who ya takin’ No. 1?

With the top overall pick in the 2017 Dividend Draft, I select ….

In the spirit of the NFL Draft, which kicks off tonight (or already started, or, depending on when you’re reading this, is already over), I figured I’d have a little fun and write a post about it … kinda. Instead of the NFL, though, it’s my draft. And instead of players, I’m picking dividend-growth stocks because, well, why not?

Oh, almost forgot … with the top overall pick in the 2017 Dividend Draft, I select … Apple (APPL).

That’s right, if I’m starting a dividend-growth portfolio right now, I’m starting it with Apple. The tech giant, which currently pays an annualized dividend of $2.28, is off the board No. 1.

I know, I know … the yield, currently at 1.58%, is pretty low compared to most of the Aristocrats out there – stocks I’d image a lot of people would take first overall. Apple has increased its dividend each of the last four years, though, and has an annual dividend growth rate of 9.9%. The Aristocrats have been shelling out payments for a lot longer, but while they’re slow and steady, Apple is in position to kick things into another gear.

I’m not drafting Apple for what it is now, I’m drafting it for what it could be later. Pro teams don’t pick college kids for what they are today, although that certainly helps; they draft them for what they think they’ll be tomorrow. Apple isn’t quite ripe yet, but once it gets there I wanna make sure I can have a bite. Remember, once a player – or stock in this case – is drafted, they’re off the board.

That makes the decision a little bit more interesting doesn’t it? Assuming any pick I don’t take No. 1 could potentially be a stock I’ll never own (in this meaningless and just-for-fun hypothetical scenario), I’m not taking any chances.

I could go on and on about why I like Apple. Really, though, it all comes down to cold, hard cash. The company makes a product everyone has – something everyone in this keeping-up-with-the-Jones’ society of ours has to have a new one of every cycle – and has a ton of money because of it. It’ll use that money to continue to innovate, grow and, you guessed it, pay dividends.

Apple has so much money it could buy Disney (so I hear). It could literally own Disney (I’ve been told). I’m just happy I can pay my mortgage on time and still have money left over to keep the fridge stocked and the car gassed up. I can barely buy an iPhone, let alone a theme park.

Apple, apparently, can buy whatever it wants.

The company could benefit from the Trump administration’s proposal to lower the corporate tax rate to 15%, too. According to Moody’s Investor Services, Apple has more cash overseas than any other U.S. company. Care to take a guess as to just how much that is? Huh? Close … it’s $230 billion. That’s billion with a B, kids. In case you’re wondering which company is hoarding the second-biggest stack of cash overseas, it’s Microsoft ($113 billion).

Apple Chief Executive Tim Cook said he’d be willing to bring that money back if it weren’t subject to the current U.S. corporate tax rate of 35%. I guess we’ll have to wait and see how that goes. Either way, though, Apple could double or even triple its current dividend and still have plenty of money left over.

The dividend, and its potential for growth, isn’t all Apple has going for it, either. The company has size (market cap of 759.57 billion), speed (stock price is up 85.71% over the last five years) and whatever other intangible you’re in the market for. Apple isn’t going anywhere, and I want to make sure its playing (working) on my team (portfolio) for the next 20 years.

I think Apple is a sure thing as a top pick. Then again, I’m a Cleveland Browns fan. In other words, I know a thing or two about busts.

Obviously, I don’t think Apple is a bust. 

Other stocks I considered were Amgen ($4.60 annualized payout, 37.4% payout ratio, 2.79% yield and six years of growth) and General Dynamics ($3.36 annualized payout, 34.5% payout ratio, 1.72% yield and 19 years of dividend growth).

So, who are you taking No. 1?