5 Semiconductor Dividend Stocks You Should Consider
By: Ned Piplovic,
After a relatively soft performance in 2018, semiconductor companies delivered significantly better results in 2019 and might be poised to extend that uptrend into 2020, especially semiconductor dividend stocks with above-average yields.
In addition to the normal expansion of the recent demand for additional computing power driven by cloud computing, business automation and autonomous transportation, semiconductor dividend stocks could get another boost from the wider implementation of 5G networks.
This new generation of mobile communication technology should deliver data transmission rates 10 to 100 times faster than the current 4G networks. The exponential increase in data transmission speeds should offer significant improvements in delivering voice, gaming and video streaming services. More importantly, in addition to improving the existing streaming services, the faster data transfer rates and reduced latency of the new 5G networks should also reduce some of the still existing barriers to a wider penetration of the Internet of Things (IoT).
With 5G, some of the new technologies that have been delayed by the old network’s data flow bottlenecks, such as autonomous cars, “smart” homes, instant medical diagnostics, etc., could be unleashed to deliver significant advances, as well as become less costly, which will further drive wider implementation.
While investors have hundreds of semiconductor stocks from which to choose, the stocks listed below meet several specific criteria to ensure best chances for long-term returns. With the smallest market capitalization of more than $21 billion, the five semiconductor dividend stocks below qualify as large-cap stocks. The largest market capitalization exceeds $263 billion for an average of nearly $110 billion.
In the technology sector known traditionally for lower-than-average dividend yields, all five stocks below exceed the sectors current 1.11% simple average yield. Additionally, three of the five companies also outperformed the 1.63% yield average of the semiconductor industry sub-segment. The yields range from 1.34% on the low end to the 4.15% on the top of the range for a simple average yield of 2.32% for all five companies.
In addition to offering large capitalizations and above-average yields, all five stocks listed below offer positive returns over the past 12 months in a sector where one third of stocks delivered losses over the past year.
Sorted in ascending order by their current dividend yield, below are the five semiconductor dividend stocks you should consider for your portfolio in 2020.
5 Semiconductor Dividend Stocks You Should Consider: #5
Microchip Technology, Inc. (NASDAQ:MCHP)
Headquartered in Chandler, Arizona, and founded in 1989, Microchip Technology develops, manufactures and sells semiconductor products for various embedded control applications in the American, European and Asian markets. After beginning dividend distributions in 2002, the company advanced its annual payouts rapidly. Growing at an average rate of nearly 60% per year, the annual dividend had grown 17-fold by 2008.
In the aftermath of the 2008 financial crisis, the dividend payout continued to rise, albeit at significantly lower average rate of approximately 1% per year. However, the overall average growth year since the initial dividend distribution is nearly 19% per year. The most recent $0.367 payout in the fourth quarter of 2019 corresponds to a $1.468 annualized distribution and 1.34% forward dividend yield which is still 21% higher than the 1.11% yield average of the overall technology sector.
Driven by the overall market correction in late 2018, the share price dropped 40% in the year’s last quarter, which erased two years of capital gains. However, the share price reversed trend and advanced at twice the pace of that decline to recover all those losses by December 2019. The share price breached the previous high from mid-2018 and began 2020 in all-time high territory. The Jan. 22 closing price of $109.34 was only 1.7% below the most recent all-time high of $111.21 just 10 days earlier. The rising dividend income pushed the 45%-plus asset appreciation to a total gain of 47.4% over the trailing 12-month period. The company also delivered a 70% total gain over the last three years. Furthermore, the shareholders more than doubled their investment with a total return of more than 150% over the past five years.
5 Semiconductor Dividend Stocks You Should Consider: #4
Skyworks Solutions, Inc. (NASDAQ:SWKS)
Headquartered in Irvine, California, and founded in 1962, Skyworks Solutions develops and manufactures semiconductor products, including amplifiers, antenna tuners, receivers and wireless radio integrated circuits. After peaking in March 2018, the share price lost half its value by the end of that year. After bottoming out in late-218, the share price assumed a slow general uptrend with some volatility. After taking nearly a full year to recover, the share price surged ahead in late-2019 and advanced to its new all-time high of $124.90 on Jan. 22. This closing price marked an 83% gain above the 52-week low from one year earlier.
Skyworks Solutions did not start paying dividends until 2014. However, since introducing the income payouts, the company has boosted its annual dividend distribution every year. Over the past five years, the annual dividend payout advanced nearly four-fold, which corresponds ton average growth rate of more than 30% per year. The most recent hike for the December round of payouts increased the quarterly amount nearly 16% to $0.44 per share. This quarterly distribution converts to a $1.76 annualized payout and yields 1.41%. The 2018 share price decline limited total returns over the past three and five years to 44% and 68%, respectively. However, the timing of the 52-week low and the subsequent share price resurgence delivered a total return of nearly 80% over the past 12 months.
5 Semiconductor Dividend Stocks You Should Consider: #3
Intel Corporation (NASDAQ:INTC)
Based in Santa Clara, California, and founded in 1968, the Intel Corporation (INTC) designs and manufactures microprocessors and chipsets that send data between the microprocessor and various peripherals and accessories, as well as computer, networking and communications platforms. Despite a slight increase in volatility that included two minor declines over the last year, Intel’s stock advanced more than 25% over the trailing 12-month period.
Intel has been distributing dividend income payments to shareholders since 1992. Over the past two decades, the company failed to hike its annual dividend only three times. Despite these three misses, the total annual payout amount rose 21-fold over the past 20 years, which is equivalent to and average annual dividend growth rate of 16.4%. The current $0.315 quarterly payout and its $1.26 annual equivalent correspond to a 2% forward dividend yield.
This dividend yield combined with the capital gains to deliver a 28% total return over the past year. The total returns have been 73% and 81% over the past three and five years, respectively.
5 Semiconductor Dividend Stocks You Should Consider: #2
Qualcomm, Inc. (NASDAQ:QCOM)
Headquartered in San Diego and founded in 1985, Qualcomm Incorporated designs, develops, manufactures, and markets digital communication products worldwide.
Qualcomm’s current $0.62 quarterly dividend distribution corresponds to a $2.48 annualized payout amount that yields 2.7%. This current yield is more than twice the 1.11% simple yield average of the overall technology sector and 63% higher than the 1.63% yield average of the semiconductors industry segment. Since beginning dividend payouts in 2003, Qualcomm has enhanced its annual dividend amount more than 20-fold through the end of 2019, which corresponds to a 19.5% average annual growth rate over the past 17 years.
After losing nearly a third of its value in the last quarter of 2018, Qualcomm’s share price reversed direction in January 2019. After recovering all late-2018 losses by mid-year, the share price continued to rise. The new all-time high of $95.91 in January 2020 was nearly twice the 52-week low from late-January one year earlier. The total one-year asset appreciation of more than 71% combined with dividend income payouts for a total one-year return of 76%.
5 Semiconductor Dividend Stocks You Should Consider: #1
Broadcom, Inc. (NASDAQ:AVGO)
Based in San Jose and founded in 2005 as Avago Technologies, Broadcom, Inc. designs, develops and produces a range of semiconductor devices with a focus on digital and mixed signal semiconductor based devices worldwide through four business segments — Wired Infrastructure, Wireless Communications, Enterprise Storage and Industrial & Other.
The company’s most recent dividend hike for the December 2019 distribution boosted the quarterly payout from $2.65 in the previous period to the current $3.25 distribution amount. This new payout a $13.00 annualized dividend and a 4.15% forward dividend yield. Broadcom enhanced its annual payout mount more than eight-fold over the past five years, which corresponds to an average dividend growth rate of more than 50% per year.
After a minor cooling off period in 2018, the share resumed its recent uptrend trajectory and gained more than 20% over the trailing 12 months. This asset appreciation and the high-yield dividend combined to reward the company’s shareholders with 25.5% total one-year returns. The share price pullback in 2018 limited the three-year returns to 74%. However, the company managed to deliver total returns of nearly 220% over the past five years.
Dividend increases and dividend decreases, new dividend announcements, dividend suspensions and other dividend changes occur daily. To make sure you don’t miss any important announcements, sign up for our E-mail Alerts. Let us do the hard work of gathering the data and sending the relevant information directly to your inbox.
In addition to E-mail Alerts, you will have access to our powerful dividend research tools. Take a quick video tour of the tools suite.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.