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Chip stocks, also commonly referred to as semiconductor stocks, have quickly become some of the more popular investments within the market.
After all, it’s easy to understand why, as chips are found within nearly every daily aspect of our lives, ranging from computers to freezers.
And as we’re all aware, chip stocks had a rough showing in 2022, with oversupply and other macroeconomic forces working against them.
However, perhaps to the surprise of some, a few chip stocks reward their shareholders with dividends, providing a nice cushion against the impact of drawdowns.
Three chip stocks – Taiwan Semiconductor Manufacturing (TSM - Free Report) , Texas Instruments Inc. (TXN - Free Report) , and Broadcom Inc. (AVGO - Free Report) – all have a shareholder-friendly nature, rewarding investors with a dividend.
Below is a chart illustrating the performance of all three over the last year, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a closer glance at each one.
Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing is the world’s largest circuit foundry. The stock came under a lot of attention a few months back following a purchase from the legendary Warren Buffett.
TSM’s annual dividend currently yields a solid 1.5% paired with a sustainable payout ratio sitting at 22% of earnings. Impressively, the company’s payout has grown by nearly 11% over the last five years.
Image Source: Zacks Investment Research
In addition, TSM’s valuation multiples aren’t stretched, further reinforced by the company’s Style Score of “B” for Value.
Currently, TSM shares trade at a 16.7X forward earnings multiple, beneath the 19.9X five-year median by a fair margin.
Image Source: Zacks Investment Research
Texas Instruments Inc.
Texas Instruments is an original equipment manufacturer of analog, mixed-signal, and digital signal processing (DSP) integrated circuits.
It’s hard to ignore the company’s dividend metrics; TXN shares currently yield a rock-solid 2.9% annually, well above the Zacks Computer and Technology sector average.
And the company has been committed to increasingly rewarding its shareholders, growing its payout by more than 15% over the last five years.
Image Source: Zacks Investment Research
TXN just reported quarterly results on January 24th, which were better than expected; Texas Instruments reported earnings of $2.13 per share, above the Zacks Consensus EPS Estimate by nearly 9%.
Quarterly revenue also came in strong, reported at $4.7 billion and reflecting a 1.6% sales surprise. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Broadcom
Broadcom is a premier designer, developer, and global supplier of a broad range of semiconductor devices focusing on complex digital and mixed signal complementary metal oxide semiconductor (CMOS) based devices and analog III-V-based products.
AVGO’s dividend metrics are the most impressive of them all; the company’s annual dividend currently yields 3.1%, well above the Zacks sector average.
Additionally, the company’s payout has grown by a sizable 21% over the last five years.
Image Source: Zacks Investment Research
And for the cherry on top, Broadcom has been a cash-generating machine as of late. In its latest quarter, AVGO reported free cash flow of $4.5 billion, reflecting a 3.6% sequential improvement and an even more impressive 30% Y/Y change.
Image Source: Zacks Investment Research
Bottom Line
Chip stocks have quickly become popular investments among investors, going on fantastic runs over the more significant part of the last several years.
However, in 2022, chip stocks delivered a less-than-desired performance, with many headwinds negatively impacting businesses.
Still, all three above – Taiwan Semiconductor Manufacturing (TSM - Free Report) , Texas Instruments Inc. (TXN - Free Report) , and Broadcom Inc. (AVGO - Free Report) – reward their shareholders with dividends, providing a nice buffer to the volatility these stocks can experience.
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Like Income? These 3 Chip Stocks Pay Dividends
Chip stocks, also commonly referred to as semiconductor stocks, have quickly become some of the more popular investments within the market.
After all, it’s easy to understand why, as chips are found within nearly every daily aspect of our lives, ranging from computers to freezers.
And as we’re all aware, chip stocks had a rough showing in 2022, with oversupply and other macroeconomic forces working against them.
However, perhaps to the surprise of some, a few chip stocks reward their shareholders with dividends, providing a nice cushion against the impact of drawdowns.
Three chip stocks – Taiwan Semiconductor Manufacturing (TSM - Free Report) , Texas Instruments Inc. (TXN - Free Report) , and Broadcom Inc. (AVGO - Free Report) – all have a shareholder-friendly nature, rewarding investors with a dividend.
Below is a chart illustrating the performance of all three over the last year, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a closer glance at each one.
Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing is the world’s largest circuit foundry. The stock came under a lot of attention a few months back following a purchase from the legendary Warren Buffett.
TSM’s annual dividend currently yields a solid 1.5% paired with a sustainable payout ratio sitting at 22% of earnings. Impressively, the company’s payout has grown by nearly 11% over the last five years.
Image Source: Zacks Investment Research
In addition, TSM’s valuation multiples aren’t stretched, further reinforced by the company’s Style Score of “B” for Value.
Currently, TSM shares trade at a 16.7X forward earnings multiple, beneath the 19.9X five-year median by a fair margin.
Image Source: Zacks Investment Research
Texas Instruments Inc.
Texas Instruments is an original equipment manufacturer of analog, mixed-signal, and digital signal processing (DSP) integrated circuits.
It’s hard to ignore the company’s dividend metrics; TXN shares currently yield a rock-solid 2.9% annually, well above the Zacks Computer and Technology sector average.
And the company has been committed to increasingly rewarding its shareholders, growing its payout by more than 15% over the last five years.
Image Source: Zacks Investment Research
TXN just reported quarterly results on January 24th, which were better than expected; Texas Instruments reported earnings of $2.13 per share, above the Zacks Consensus EPS Estimate by nearly 9%.
Quarterly revenue also came in strong, reported at $4.7 billion and reflecting a 1.6% sales surprise. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Broadcom
Broadcom is a premier designer, developer, and global supplier of a broad range of semiconductor devices focusing on complex digital and mixed signal complementary metal oxide semiconductor (CMOS) based devices and analog III-V-based products.
AVGO’s dividend metrics are the most impressive of them all; the company’s annual dividend currently yields 3.1%, well above the Zacks sector average.
Additionally, the company’s payout has grown by a sizable 21% over the last five years.
Image Source: Zacks Investment Research
And for the cherry on top, Broadcom has been a cash-generating machine as of late. In its latest quarter, AVGO reported free cash flow of $4.5 billion, reflecting a 3.6% sequential improvement and an even more impressive 30% Y/Y change.
Image Source: Zacks Investment Research
Bottom Line
Chip stocks have quickly become popular investments among investors, going on fantastic runs over the more significant part of the last several years.
However, in 2022, chip stocks delivered a less-than-desired performance, with many headwinds negatively impacting businesses.
Still, all three above – Taiwan Semiconductor Manufacturing (TSM - Free Report) , Texas Instruments Inc. (TXN - Free Report) , and Broadcom Inc. (AVGO - Free Report) – reward their shareholders with dividends, providing a nice buffer to the volatility these stocks can experience.