Could This Bull Market Buy Help You Become a Millionaire?
Apple (NASDAQ: AAPL) has helped many investors become millionaires or at least generate a significant amount of wealth over the years. The maker of the iPhone, Mac, and other popular products has grown earnings over time, and that's prompted share-price performance. For example, Apple, including dividend payments, has climbed more than 900% over the past decade.
In recent times, though, declining demand from China has weighed on earnings growth, and investors have seen Apple as slower than other tech companies to invest in the high-growth area of artificial intelligence (AI). As a result, the tech giant's shares have lagged behind; this year, they've hardly changed so far.
Still, Apple over time has proven it's a growth company you can count on, and a top buy during bull markets and beyond. So could this bull market buy help you become a millionaire in the coming years as it's done for others in the past? Let's find out.
Image source: Getty Images.
A mature company
It's true that Apple has become a mature growth company, so if you buy the stock today, you probably won't generate explosive short-term gains as you would with a younger tech player just releasing its first products. And certain elements, as mentioned above, have hurt share-price performance.
But, by investing in Apple at this point in time, you'll get a company that's proven itself -- with a strong moat, or competitive advantage, that equals earnings growth over time. This moat is Apple's brand strength, something that keeps customers coming back to its devices and even continues to bring in new customers. In recent quarters, many buyers of devices like Mac and iPad were new to those particular products.
And on top of this, as a shareholder of Apple, you'll collect a dividend. This isn't something you'll get with every technology company. So with Apple, you'll have a nice balance of growth and passive income.
But this doesn't mean the company's growth story is over. It's important to consider what Apple has accomplished so far and how that can boost future earnings. And this brings me to the subject of services. Today, Apple has reached a record level of more than 2.2 billion active devices in the hands of users worldwide.
Apple's record-high services revenue
Revenue from a device doesn't stop when the potential user purchases it. Instead, the revenue opportunity is just beginning thanks to Apple's broad variety of services, from cloud storage to digital content. This services revenue has been reaching record highs quarter after quarter over the past year. Though products still make up most of Apple's revenue -- 73% of $90 billion in the most recent quarter -- services account for about 25%, which is significant. And the company's gross margin on services is higher, meaning services could lead to higher profitability.
Importantly, Apple showed us recently that it's confident in its future prospects by announcing its biggest share-buyback plan ever. The company's board authorized $110 billion in share repurchases.
Now let's get back to our question: If you buy Apple shares today, could this investment help you become a millionaire? The important word here is "help." As part of a diversified portfolio and a long-term investment strategy, Apple could help you grow wealth and even reach millionaire status.
Fuel for more gains
Apple has plenty of fuel for more gains over time due to its products that continue to attract loyal fans as well as these products' link to recurrent revenue -- thanks to the services they offer users access to. The company's dividend delivers an extra boost, meaning you can collect passive income from this investment, which should increase your gain potential over the long run.
But it's important to remember that Apple -- like any given stock -- isn't likely on its own to make you a millionaire unless you make an enormous investment in that one company. That's a risky bet I wouldn't recommend even when talking about a solid player like Apple.
Instead, a better idea is to add this reliable growth stock to your portfolio along with other quality companies and hold on for at least five to 10 years. This strategy could set you off on the path to grow considerable wealth over the long run.
Should you invest $1,000 in Apple right now?
Before you buy stock in Apple, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $581,764!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of May 13, 2024
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
