Buffett's Favorite Stock: Apple's Dividend Potential Unlocked

Warren Buffett's largest position and one of his crowning achievements is Apple. Despite its massive size, there's still growth potential for the company, with analysts expecting a 13% annual earnings growth over the next three to five years.

The stock yields only 0.3%, but the payout is just 12% of 2026 earnings estimates, leaving plenty of room for it to go higher. Apple spends far more on buybacks than on dividends, but this can actually help dividend investors in the long run.

When a company buys back its own shares, it reduces its share count and inflates per-share profits. This means Apple can pay a higher per-share dividend with the same total cash it spends. In fact, the company has spent $82 billion on buybacks over the past four quarters alone and lowered its share count by 31.5% over the past decade.