Buy 1 S&P Dividend stock down 12% to hold permanently.

speaking ofNvidia (NASDAQ: NVDA),Microsoft(NASDAQ resonance stock code:MSFT),Meta (NASDAQ resonance stock code: META)(math.) andApple (NASDAQ resonance code: AAPL)Which one is different from the others? Sure, they're all iconic tech companies. But with the market routinely breaking out to all-time highs, only one of these stocks is actually trading higher year-to-date (YTD) than the others.fallingThis is Apple.

Apple shares are down nearly 12% so far this year, down 14% from their all-time highs, and market sentiment seems to be very negative. As you can see in the chart below, over the past year, Apple shares have underperformed compared to the high-priced stocks mentioned above.

Apple faces a number of challenges, such as the struggles of China's consumer economy and challenges from the U.S. Department of Justice (DOJ).

Why did Apple's stock price fall?

Apple has had a couple of challenges lately. The pandemic-era stimulus was a huge boon for consumer electronics, but it dried up just as inflation began to eat away at people's budgets. Investors are also looking at other areas, mainly artificial intelligence (AI) (just look at the AI stocks in the chart above!). ), and Apple is only a minor player in this area. But the biggest reason is China.

China accounts for 19% of Apple's revenue and 20% of its operating income in FY2023. China's economy is struggling much more than that of the U.S., and Chinese competitors such as Huawei are grabbing market share. Reports that iPhone sales in China fell 33% in February compared to the same month a year earlier are an obstacle, but buying shares of a great company in a downturn is often the best long-term strategy for making money.

Now that we know some of the challenges, let's look at the other noodle.

Is Apple stock worth buying now?

Here are three reasons to be optimistic:

1. Consumer Advantage

2. Services

3. The Capital Revolutions.

While iPhone sales in China declined, total gross sales in the last quarter (Apple's first quarter) grew by 6%. Total gross revenues grew by only 2%, while operating income grew by 12%, suggesting that inflationary pressures on margins are easing. U.S. consumers are resilient, with consumer sentiment at its highest point in nearly three years. The recession that many feared is now a certainty. Apple is too big to be a high-growth company right now, but profits should remain strong.

Another reason for Apple's dramatic growth in operating revenue is its booming services division, which has seen exponential growth as shown in the chart below.

Services include Apple Pay, iCloud subscriptions, advertising, and more. Last quarter, sales of these services accounted for 191 TP3T of Apple's revenue, with a gross margin of 731 TP3T, compared to a gross margin of 391 TP3T on product sales, meaning Apple's fastest-growing revenue stream is also its most profitable.

Apple is a mother of cash, generously returning money to its shareholders. Last quarter, it generated $40 billion in cash from operations and returned $27 billion to shareholders through dividends and stock purchases. Since FY2020, it has returned $432 billion, or 16% of its current total market capitalization.

Apple spends more cash on buybacks than dividends. Some people say that a dividend yield of less than 1% is unattractive, but I prefer the buyback. Stock buybacks are beneficial because they are not taxable to the investor each year. Instead, they reduce the number of shares of Apple stock, which increases earnings per share (EPS) and therefore the stock price. Since 2020, Apple's rate of return on total assets has been almostSPDR Standard & Poor's 500 Index Trust Twice as much as the Fund.

Finally, I can't leave out the recent release of the Apple Vision Pro, the latest attempt at wearables that allows users to use apps, browse the web, take and watch 3D photos and videos, and play games on screens big or small by "connecting the physical and digital spaces". The technology is far beyond my wildest dreams, but it's truly incredible, another source of revenue for Apple, and a testament to innovation.

Apple's price-to-earnings (P/E) ratio is 26.7, which is slightly lower than the three-year and five-year averages. Therefore, instead of rushing to accumulate shares, interested investors should take advantage of Apple's current negative sentiment and buy slowly over time to capitalize on price declines. Many people will tell you that once you own the stock, sticking with it for a long time will pay off.

Should you invest $1,000 in Apple now?

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*Stock Advisory Rates as of April 1, 2024

Randi Zuckerberg, former Facebook Market Development Mass Director and spokeswoman, and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's Board of Directors. Bradley Guichard owns shares of Nvidia. The Motley Fool owns shares of recommended stocks of Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: Long Microsoft January 2026 $395 Calls and Short Microsoft January 2026 $405 Calls. The Motley Fool has a disclosure policy.

S&P Dividend Stocks Down 12%, Buy 竝 Hold 1 Gorgeous S&P Dividend Stock Forever was originally published by The Motley Fool.