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Demand for iPhones remains insatiable. The maker of the iPhone, Apple (NASDAQ: AAPL), continually whets consumer appetite by continually adding more flavorful entrées.
The iPhone 7S, an upgraded version of the iPhone 7, will be served in September. The iPhone 8 will be added to the menu in the fourth-quarter (calendar year) 2017.
Apple’s preliminary data show both iPhones will be devoured quickly, and devoured with gusto by more consumers. Apple raised its quarterly revenue guidance to a range of $49 billion to $52 billion. The consensus estimate had hovered low at $49 billion.
Demand for Apple shares has proved equally insatiable. Apple shares popped 6% higher to hit another record this week. Apple shares are up 35% year to date.
After hearing the good news, many investors react like a knee-jerk: They bought immediately to get in the game.
To belabor the obvious, Apple is a terrific company. To reveal the concealed, terrific companies aren’t synonymous with terrific investments.
Apple Shares: Price and Value Matter
Price matters. Price and value are interdependent. Value is indeterminable without price.
As for Apple’s value and price, its record high share price diminishes its immediate value (even given the upgraded outlook). The 1.6% dividend yield diminishes Apple’s attractiveness to income investors.
But no need to fret. Income investors who double as Apple aficionados can still get in the game, and get in at a value price.
A strategy exists to buy Apple (and other blue-chip dividend-growth stocks) at a deep discount to net asset value. The same strategy also supercharges dividend yield.
Wealthy investors — Buffett, Gates, Icahn, Gabelli, and Ackman — have all exploited this strategy. The strategy involves buying a specific type of investment fund. These funds are unlike mutual funds and ETFs. These funds frequently trade at steep discounts to net asset value. Most offer distribution yields up five times the dividend yield of the S&P 500.
Buffett, Gates, Icahn, Gabelli, Ackman, and other wealth investors are aware of these funds. Most investors are in the dark. These funds attract only 3% of all fund money. These funds are dwarfed by the mutual-fund and ETF competition.
The fund specific to Apple, to which I refer, offers more than Apple. It offers other blue-chip dividend-growth stocks. Unlike Apple, this fund pays a distribution that generates a 4.8% yield — three times the yield that Apple offers.
And here’s the kicker: this fund is on sale. Its shares trade at a 16% discount to net asset value (NAV). For every $0.86 invested, a dollar’s worth of investment value is received. This includes Apple stock.
Strategy of Wealthy Investors
So, I offer a ray of light.
If you want to learn the investment strategies the wealthiest investors exploit to buy the best investments at a discount and earn more income to boot, then join me at a free live webinar next week.
You’ll learn how to buy investments at up to a 20% discount to market value. You’ll learn how to collect income up to five times the income offered by the average dividend-growth stock. You’ll learn how to invest like the wealthiest income investors.