This week Apple’s share price hit $500 / share. At that price the company has a market capitalization of a little over $460 billion and it firmly holds the title of “World’s Largest Company”, by market cap at least. Exxon Mobil comes in second with a market cap just over $400 bln. Not an insignificant difference between first and second place.

I frequently get questions about Apple stock and was looking at it today when another one of the “shouldn’t we be in Apple” emails came in. At the same time that I got that email I was looking at the Canadian banks and this is what I noticed when comparing the two:

• The Big 5 Canadian Banks (Royal, TD, BNS, BMO & CIBC) have a combined market cap of $275.7 billion. That means that Apple, alone, is worth almost 67% more than the Big 5 combined!

• Apple’s net income is just under $26 billion dollars. The Big 5 have a combined net income of $23.65 billion; Apple’s net income is almost 10% higher.

• Then we get to my favourite metric, dividends. And in this metric there is no contest. Apple pays nothing! The Big 5 dish out almost $11 billion in annual dividend payments and, with the exception of BMO, all raised their dividend in 2011. I expect that every member of the Big 5 will raise their dividends this year and will continue to do so well into the future. Apple might start paying a dividend in 2012 but they don’t yet pay one and it remains to be seen how much of their giant cash hoard will be returned to shareholders if a dividend is initiated.

On some metrics Apple stock does look cheap, given their growth profile, but when I think about the points above I just can’t justify buying a company who’s value is 67% more than the combined value of 5 of Canada’s premier publicly traded companies especially when its’ net income is only 10% higher and it doesn’t pay a dividend.

While Apple needs to constantly innovate to stay on top and make massive profits the Banks don’t need to reinvent the chequing account every quarter. They don’t need a show in Vegas to tout their latest mortgage rates or to announce a dividend hike. With an average yield of 4.19% it won’t require much in the way of capital appreciation for the Canadian banks to provide adequate long-term investment returns in the coming years so they have a 4.19% / year head start on Apple, in my opinion. I look at portfolios as if they were a high quality piece of real estate. My job is to fill the space with high quality tenants. It isn’t hard for me to decide which of the above tenants I’d be renting out spots to; the ones that pay rent (read dividends) will win out every time!

Disclosure: The author owns shares of Royal Bank, TD Bank & the Bank of Nova Scotia in his personal portfolio or those of his family members.