Six Semiconductor Investments to Purchase for Dividends Despite Putin’s Predicament

Six semiconductor investments to purchase for dividends may well product profits despite Russia’s President Vladimir Putin‘s predicament of invading Ukraine and incurring international condemnation.

The six semiconductor investments to purchase for dividends after their share prices recently retreated should be insulated from financial fallout due to robust demand from growth industries such as electric vehicles, consumer electronics and data servers. But supply chain problems due to COVID-19 outbreaks, shipping challenges, climbing costs and Putin’s ill-fated deployment of 150,000 troops to attack its peaceful neighbor Ukraine have posed perilous challenges.

The world’s premier semiconductor manufacturer is Taiwan Semiconductor Manufacturing Company Ltd. (NYSE: TSM), of Hsinchu, Taiwan, opined Bob Carlson, a pension fund chairman who also heads the Retirement Watch investment newsletter. A key risk, outside of normal business and market issues, is that China might be emboldened by Putin’s attack of Ukraine and invade Taiwan, he added.

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Chinese Threats May Affect Six Semiconductor Investments to Purchase for Dividends

Taiwan’s Minister of Foreign Affairs Joseph Wu said on Jan. 13 that military threats expressed it by China was not just rhetoric. China’s leaders have beefed up their country’s military and openly discussed “invading” Taiwan. He mentioned that Chinese military aircraft in 2021 had flown more than 900 sorties — a French word for military missions — that passed over Taiwanese territory.

The Chinese Communist Party (CCP) aired a video in its native language during July 2021 that warned Japan of a nuclear response and “full-scale war” if the island nation interferes with the world’s most populous country’s plans to annex Taiwan. The video, aired on a channel that is approved by the CCP, named Japan as the one exception to China’s policy to not use nuclear weapons against non-nuclear powers.

In response to the growing threat, Wu said Taiwan has acquired new weaponry and is preparing for potential military action from China.

Taiwan Semiconductor Maker Headlines Six Semiconductor Investments to Purchase for Dividends

“TSM is rapidly building facilities around the globe, including in the United States,” Carlson said.

Taiwan Semiconductor is a marketplace leader and typically a top holding in industry funds, Carlson commented. Company officials describe it unabashedly as the “world’s largest and best semiconductor foundry.”

Bob Carlson, head of Retirement Watch, speaks with columnist Paul Dykewicz.

Taiwan Semiconductor has developed its own semiconductor design ecosystem and teamed up with its customers and partners for further innovations. The company estimates it has produced approximately 85% of worldwide semiconductor start-up product prototypes.

In addition, Taiwan Semiconductor reported that it has built 12,302 different products with 291 unique process technologies to serve hundreds of customers with more than 13 million 12-inch-equivalent wafers in 2021. The company claims to have 26% market share in semiconductors.

Six Semiconductor Investments to Purchase for Dividends that Putin Cannot Plunder

Taiwan Semiconductor has attained a 17.5% cumulative average growth rate (CAGR) in revenue and 17.1% in earnings since its initial public offering in September 1994 on the Taiwan Stock Exchange. The company’s management announced that it is targeting revenue CAGR of 15-20%, gross margin of 53% or higher and return on equity (ROE) beyond 25% between 2021 and 2026.

The company boasts of having the semiconductor industry’s highest credit rating of AA- with the S&P and Aa3 with Moody’s. Another strength is that Taiwan Semiconductor has relied only on its own internally generated funds to finance its organic growth, company officials indicated.

The company’s two largest U.S. clients are Cupertino, California-based Apple (NYSE: APPL), a global multinational technology company, and Chicago’s Archer-Daniels-Midland Company (NYSE: ADM), which combined to account for more than 36% of Taiwan Semiconductor’s revenue from this business segment. With Apple and Archer-Daniels-Midland, a Chicago-based multinational food processing and commodities trading business founded in 1902, their sales reflected a 24% jump in the past year and a 64% rise in its share of the U.S. computer chip market, company officials reported.

Taiwan Semiconductor’s share price has fallen 10.23% in the last month, 10.97% so far this year and 5.46% in the past six months. As a semiconductor industry leader, the stock seems likely to recover in the months ahead.

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iShares MSCI Taiwan Is One of Six Semiconductor Investments to Purchase for Dividends

For investors wary about buying shares of TSM with its share price hitting 52-week lows, an alternative way to take a sizeable position in the company with less all-or-nothing risk is to buy iShares MSCI Taiwan ETF (EWT). TSM composes more than 21% of the exchange-traded fund (ETF), while technology companies make up 58% of EWT. It’s a low-cost, diversified way to capture this opportunity.

The fund slid 4.49% in the past month and 6.14% thus far this year, while rising 11.14% in the past 12 months. However, the stock price remains vulnerable with the Fed raising interest rates, inflation rising, supply chain challenges and Russia’s continuing onslaught of Ukraine that has caused the deaths of thousands of people on each side since Putin’s imprudent invasion began on Feb. 24.

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SOXX is the Third of Six Semiconductor Investments to Purchase for Dividends

A global way to invest in semiconductors is iShares Semiconductor ETF (SOXX). The fund tracks the ICE Semiconductor Index. Top holdings recently were Broadcom (NASDAQ: AVGO), Advanced Micro Devices (NASDAQ: AMD), Qualcomm (NASDAQ: QCOM), NVIDIA (NASDAQ: NVDA) and Intel (NASDAQ: INTC). It owns 30 stocks, and 60% of the fund is in the 10 largest positions.

SOXX also has persevered amid a share price plunge in recent months. The fund is up narrowly by 1.64% for the past month, is down by 12.5% so far this year but jumped 18.04% in the past year.

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Invesco’s PSI Is the Fourth of Six Semiconductor Investments to Purchase for Dividends

A more volatile but possibly more rewarding choice is Invesco Dynamic Semiconductors ETF (PSI). The fund tends to invest in smaller companies than SOXX and those selling at deeper values, Carlson continued.

PSI also invests in companies with higher standard deviations than the index. The fund is actively managed and looks for high-quality stocks, with lower financial leverage and solid returns on equity.

PSI’s top holdings recently were Texas Instruments (NASDAQ: TXN), Broadcom (NASDAQ: AVGO), Applied Materials (NASDAQ: AMAT), NVIDIA (NASDAQ: NVDA) and Qualcomm (NASDAQ: QCOM). It also owns 30 stocks but has 46% of the fund in the 10 largest positions. The fund has sunk since the start of the year, giving new investors a chance to pick up shares for a relative bargain. The fund has climbed 3.51% for the past month, but slid 13.42% so far this year, while gaining 14.77% in the last 12 months.

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More semiconductor fabrication facilities are becoming established in the United States to add to its independence — “just like oil,” said Michelle Connell, CFA, a former portfolio manager who now is president and owner of Portia Capital Management, of Dallas, Texas.

Michelle Connell, CEO, Portia Capital Management

NVIDIA Is the Fifth of Six Semiconductor Investments to Purchase for Dividends

Connell told me she likes NVIDIA (NASDAQ: NVDA), a Santa Clara, California-based pioneer of graphics processing unit GPU-accelerated computing that went public on January 22, 1999. Graphics processing is one of the most important types of computing technology, both for personal and business computing. Designed for parallel processing, the GPU is used in a wide range of applications, including graphics and video rendering. Although GPUs are well known for their gaming capabilities, the technology is increasingly used in creative production and artificial intelligence (AI).

Even though GPUs originally were designed to accelerate the rendering of 3D graphics, they later became more flexible and programmable, enhancing their capabilities. This allowed graphics programmers to create more interesting visual effects and realistic scenes with advanced lighting and shadowing techniques. Other developers began to tap the power of GPUs to dramatically accelerate additional workloads in high performance computing (HPC), deep learning and more.

NVIDIA focuses on products and platforms for the large, growing markets of gaming, professional visualization, data center and automotive industries. The company’s creations are used by demanding gamers, designers and scientists. Thus, NVIDIA’s work is at the center of consequential technology mega-trends. NVIDIA has jumped 11.91% in the last month, but slid 10.04% year to date, while soaring 108.05% in the past year.

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Lam Research Joins List of the Six Semiconductor Investments to Buy at Reduced Prices

Lam Research Corp. (NASDAQ: LRCX), a Fremont, California-based supplier of wafer fabrication equipment and related services to the semiconductor industry, has fallen back in the last year. It has dropped 4.08% for the past month and 24.06% so far in 2022 but is up slightly by 2.09% in the past year.

That slide positions the stock to rise about 35%, Connell predicted. She labeled the fund a buy at the currently reduced price.

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Despite Putin’s continued aggression against Ukraine, amid protests in Russia that included a journalist, Marina Ovsyannikova, who showed an anti-war sign on the country’s state-controlled Channel 1 television news broadcast. Her sign explained the country’s government-controlled media was lying. Despite the controversy and stiff new penalties against journalists who try to report the truth rather than Putin’s propaganda, demand for advanced semiconductor products remains strong.

COVID-19 Cases Approach 80 Million in the United States

COVID-19 cases currently are climbing in China and several countries in Europe. China’s outbreak is its worst since the virus emerged in Wuhan. COVID cases also are climbing in European countries such as Germany, the Netherlands and Switzerland.

COVID-19 deaths worldwide totaled 6,069,889 on March 18, according to Johns Hopkins University. Cases across the globe have soared to 467,261,543, up more than 11 million in the last week.

U.S. COVID-19 cases, as of March 18, reached 79,714,250, as deaths rose to 970,769. Despite most of the people in America receiving vaccines, the country has faced the most COVID-19 cases and deaths.

As of March 18, 254,870,034 people, or 76.8% of the U.S. population, have obtained at least one dose of a COVID-19 vaccine, the CDC reported. Fully vaccinated people total 216,952,347, or 65.3% of the U.S. population, according to the CDC.

The six semiconductor investments to purchase for dividends should rebound in the months ahead, as Putin’s self-created predicament is likely to keep falling into perilous pitfalls such as a plunging currency, economic sanctions imposed by other countries who oppose his brutal war and protestors who disagree with Russian leader’s targeting of innocent civilians for bombing and missile attacks. The resolve of the Ukrainian people to fend off Putin’s forces to preserve their freedom and their democracy also could show China the risk of invading a foreign land and possibly joining Russia as the next international pariah.