Dividends from China’s Apple Tree

The sad news of the passage of Apple (NASDAQ: AAPL ) co-founder Steve Jobs put
the spotlight on the tech giant's future. Will Apple stock continue being the
juggernaut it has been during the past decade, or will shares falter now that
Steve Jobs is gone? That question will have to be answered with time; however,
before Jobs left the Apple's helm, he put one plan in place that's likely to
pay dividends for investors willing to look to the Far East. In late August,
Chinese telecom giant China Mobile (NYSE: CHL ), the largest mobile wireless
provider in the world with more than 600 million subscribers, confirmed that it
was in talks with Apple to offer the iPhone on its specialized TD-SCDMA network.
During a press conference following the carrier's earnings announcement, China
Mobile Chairman Wang Jianzhou noted that he had met with Steve Jobs to discuss
bringing a customized version of the phone to the carrier. No deal was
confirmed, but the smart money is betting that the iPhone will make its way to
China via China Mobile at some point in 2012. Click to Enlarge Actually, the
iPhone, along with its beefed-up tablet brother the iPad, already are available
in China through the country's second-largest mobile carrier, China Unicom
(NYSE: CHU ). Both devices have enjoyed wild success, and in the most recent Q2
update from Apple, CEO Tim Cook said, "Greater China saw iPhone sales up over
3x, about 200 almost 250%. And this catapulted revenue for the first half or
first fiscal half in Greater China to just under $5 billion, which is up almost
4x year-over-year." There is no reason to believe that Apple's growth in
China will be anything but robust, and that bodes well for a new iPhone outlet
via China Mobile. Now, since I am all about buying stocks for dividends and high
yield, if Apple paid a dividend, I would be all over it. I also would be partial
to China Unicom based on the Apple connection if the stock had a reasonable
dividend yield, but with a measly yield of about 0.5%, it doesn't meet my
requirements for dividend-oriented investors. China Mobile has a dividend yield
of 3.8%, so if your objective is getting a solid income stream from an
Apple-related stock with tremendous growth potential, then CHL definitely is one
to check out. On its own, China Mobile has impressive stats. The company has a
market capitalization of $193 billion and is growing top-line revenues by about
9%, to $79 billion, as of the second quarter. Profit margins are running at 24%,
and it has $51 billion in cash on hand with a payout ratio of only 37%. Those
are great metrics by themselves, and really enough reasons to love CHL. But when
you add in the Apple factor to the mix well, you get dividends straight from
China's Apple tree. Disclosure: Bryan Perry recommends China Mobile in his
Cash Machine advisory service.