40% Dividend Bump for This Tech Bubble Survivor
This stock may not be on the typical dividend investor’s radar, but it did just increase its dividend by 40%.
And that bigger dividend plus an optimistic growth outlook means it’s time to drill down and take a look.
So let’s acquaint ourselves with Qualcomm (QCOM)…
The NASDAQ is (Not Quite) Back
Wall Street has been cheering since the Dow passed its October 2007 intraday peak of 14,198.10. The S&P 500 is edging up against new all-time highs, as well.
But not the tech-heavy NASDAQ. While it has more than doubled since 2009, it remains 35% below the peak it hit in March of 2000.
And Qualcomm is a NASDAQ component that’s also well off its all-time high of $100.00 per share.
But unlike Apple (AAPL), which had been as high as $700.00 per share this past September, Qualcomm is still rising and about to set a new 52-week high.
And it could go higher, still.
You see, the recent dividend boost isn’t the act of a desperate company. Qualcomm has been paying and raising its dividend regularly since 2003.
As a matter of fact, the company raised it every year of the financial crisis, unlike so many other companies.
And over the last five years, shareholders have enjoyed Qualcomm’s average dividend growth rate of 12.30%.
What’s more, its super-low dividend payout ratio means the company can afford to raise it again.
But that’s not the only good news.
If You Have a Cellphone…
… then you’ve probably got Qualcomm.
You see, Qualcomm has its paws deep in the mobile phone business. If your cellphone functions on a CDMA-based network, then its manufacturer is paying royalties to Qualcomm.
By the way, all 3G wireless networks are CDMA-based. And that’s good business for Qualcomm.
It’s also the wireless chip provider for Apple. Actually, Qualcomm is in all of Apple’s iPhone 4S and 5 devices.
And the company is involved with the newer 4G technologies, having already landed early deals with Nokia, Samsung and LG.
The Money Should Keep Flowing
This past January, Qualcomm reported terrific earnings for its fiscal first quarter.
Revenue reached a record $6 billion. That’s 29% more than last year, and higher than expectations. Net income was also up a whopping 36%.
The company is also optimistic about the rest of the year. For the full year 2013, it’s targeting revenue of between $23.4 billion and $24.4 billion, with earnings per share between $4.25 and $4.45.
Of course, there are detractors that point to any number of reasons for Qualcomm’s stock price to stall…
Whether it’s flat growth in the U.S. smartphone market or dependence on sales to China and Southeast Asia…
Or that competitors are trying to steal market share while the company faces the legal costs of defending its patents…
Or the new Snapdragon processor, which Qualcomm has high hopes for but that some observers note is not, as yet, being utilized by Apple.
However, most analysts are posting bullish outlooks for Qualcomm, agreeing with me that there’s ample reason for confidence, not dread.
Let the good times roll.
Safe investing,
Steve Gunn
