Back to top

Image: Bigstock

5 Dividend-Paying Stocks to Watch in the Semiconductor Space

Read MoreHide Full Article

Rising demand for processors used in enterprise laptops and data center servers and the increasing adoption of consumer electronics, industrial tools & equipment, and networking & communication products have been contributing well to global semiconductor industry sales, which increased 7.3% year over year to $49.0 billion in July 2022, per a report by The Semiconductor Industry Association.

The growing usage of advanced technologies like AI, IoT and Virtual Reality in various sectors, including healthcare, defense, retail and agriculture, is also contributing to the industry’s growth.

A Mordor Intelligence report states that the semiconductor industry landscape is expected to be worth $906.3 billion by 2027, witnessing a CAGR of 8.23% between 2022 and 2027.

However, memory demand and pricing have softened, especially in consumer-related areas like PCs and smartphones. These, along with the persistent chip shortage, might burden overall semiconductor revenue growth in the near term. Per a Gartner report, PC shipments are expected to decline 13.1% in 2022, after recording growth in 2020 and 2021. Semiconductor revenues from PCs are estimated to record a decline of 5.4% in 2022. The pace of semiconductor revenue growth is expected to slow down to 3.1% in 2022, compared with 24.5% growth in 2021.

Investors have been recognizing the increasing pessimism around the possibility of a recession, rising interest rates, soaring inflation, and log-jammed supply chains, which are dragging companies and the economy down.

We believe that amid the ongoing macroeconomic headwinds and highly volatile market scenario, investing in high-quality dividend-paying tech stocks like —Texas Instruments Incorporated (TXN - Free Report) , Vishay Intertechnology, Inc. (VSH - Free Report) , Analog Devices (ADI - Free Report) , NXP Semiconductors (NXPI - Free Report) and Skyworks Solutions (SWKS - Free Report) — might fetch you handsome returns.

A stock with a history of increasing dividends is considered healthy and offers a capital appreciation opportunity irrespective of stock market movements. Dividend growth stocks generally act as a hedge against economic uncertainty and offer downside protection with a consistent increase in payouts.

Watch These Dividend-Paying Semiconductor Stocks

With the help of the Zacks Stock Screener, we have selected five semiconductor stocks with a Zacks Rank #3 (Hold), a dividend yield in excess of 2% and a five-year historical dividend growth rate of more than 0.1%. These stocks have a payout ratio of less than 60%, reflecting enough room for future dividend increases. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NXP Semiconductors N.V. provides high-performance mixed signal and standard product solutions that leverage its RF, analog, power management, interface, security, as well as digital processing expertise. These solutions are used in a wide range of applications, namely automotive, wireless infrastructure, lighting, industrial, mobile, consumer and computing.

The company is benefiting from a strengthening demand environment across the end markets. It continues to benefit from a strong position in secular growth markets, including automotive, industrial & IoT, mobile, and communication infrastructure & others.

Solid momentum across auto radar systems, auto domain and zonal processors, auto electrification systems, secure connected edge solutions, UWB secure access solutions and RF power for 5G infrastructure continue to remain key catalysts. Further, the company’s robust sensing, processing and control applications are driving top-line growth.

The stock has a dividend yield of 2.10% and a five-year historical dividend growth of 40.35%. Further, TXN's payout ratio is 26% of earnings at present. Check NXP Semiconductors’ dividend history here.

NXP Semiconductors N.V. Dividend Yield (TTM)

NXP Semiconductors N.V. Dividend Yield (TTM)

NXP Semiconductors N.V. dividend-yield-ttm | NXP Semiconductors N.V. Quote

Skyworks Solutions designs, manufactures, and markets a broad range of high-performance analog and mixed-signal semiconductors that enable wireless connectivity.

Skyworks is benefiting from accelerated 5G deployment and increasing demand for Wi-Fi 6 solutions, as reflected by the fiscal third-quarter results. Broad markets benefited from strong demand for the company’s solutions for automotive, industrial, data center and network infrastructure end-markets.

Skyworks’ solutions are now being used by the likes of Cisco, Orange, Verizon and Google. Skyworks’ Sky5 product portfolio facilitates several 5G smartphone launches and its offerings have been selected by Samsung and Google. Skyworks’ diversified portfolio positions it well to capitalize on momentum witnessed across driverless vehicle providers as well as high-power industrial and IoT applications.

Skyworks Solutions has a dividend yield of 2.53% and a five-year annualized dividend growth of 14.35%. Also, the company's payout ratio is 23% of earnings at present. Check Skyworks Solutions’ dividend history here.

Vishay Intertechnology is a global manufacturer and supplier of semiconductors and passive components. The company’s products include metal oxide semiconductor field-effect transistors (MOSFETs), Diodes and Optoelectronic Components.

Vishay Intertechnology is steadily gaining from its robust resistor, diode, capacitor, inductor and optoelectronics product lines. Further, a recovery in the automotive sector and strong momentum across the industrial, telecommunications, power supplies markets are driving the top line.

In addition, Vishay Intertechnology’s robust magnetics is continuously driving the specialty business. Further, growing momentum across the areas of power transmission and electro cars with the help of robust capacitors is a tailwind. Additionally, VSH’s firm focus on expanding its manufacturing capacities remains a major driver.

The stock has a dividend yield of 2.14% and a five-year annualized dividend growth of 8.12%. Also, the company's payout ratio is 14% of earnings at present. Check Vishay Intertechnology’s dividend history here.

Vishay Intertechnology, Inc. Dividend Yield (TTM)

Vishay Intertechnology, Inc. Dividend Yield (TTM)

Vishay Intertechnology, Inc. dividend-yield-ttm | Vishay Intertechnology, Inc. Quote

Analog Devices is an original equipment manufacturer of semiconductor devices, specifically analog, mixed-signal and digital signal processing (DSP) integrated circuits.

Analog Devices is riding on the strength across consumer, communications, industrial and automotive markets. Solid demand for high-performance analog as well as mixed-signal solutions is a tailwind. Strong momentum across the electric vehicle space on the back of its robust Battery Management System solutions is a positive.

Increasing power design wins are other positives. The solid momentum of the Hybrid Electric Vehicles (HEV) platform across the cabin electronics ecosystem remains a tailwind. The company also remains optimistic about the growth opportunities related to 5G.

Analog Devices has a dividend yield of 2.03% and a five-year annualized dividend growth of 11.95%. Also, the company's payout ratio is 35% of earnings at present. Check Analog Devices’ dividend history here.

Analog Devices, Inc. Dividend Yield (TTM)

Analog Devices, Inc. Dividend Yield (TTM)

Analog Devices, Inc. dividend-yield-ttm | Analog Devices, Inc. Quote

Texas Instruments is an original equipment manufacturer of analog, mixed-signal and DSP integrated circuits. The company is benefiting from a solid rebound in the automotive market.

The solid demand environment in the industrial, communication equipment and enterprise systems markets is a major positive. Additionally, strong momentum across the Analog segment, owing to robust signal chain and power product lines, is contributing well to the top line. Also, the Embedded Processing segment is performing well.

The stock has a dividend yield of 2.77% and a five-year historical dividend growth of 17.38%. Further, TXN's payout ratio is 50% of earnings at present. Check Texas Instruments’ dividend history here.

Published in