QUALCOMM's (NASDAQ:QCOM) Shareholders Will Receive A Bigger Dividend Than Last Year

By
Simply Wall St
Published
November 20, 2021
NasdaqGS:QCOM
Source: Shutterstock

QUALCOMM Incorporated's (NASDAQ:QCOM) dividend will be increasing to US$0.68 on 16th of December. This will take the dividend yield to an attractive 1.5%, providing a nice boost to shareholder returns.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that QUALCOMM's stock price has increased by 30% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

See our latest analysis for QUALCOMM

QUALCOMM's Earnings Easily Cover the Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, QUALCOMM's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 16.2% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 31% by next year, which is in a pretty sustainable range.

historic-dividend
NasdaqGS:QCOM Historic Dividend November 21st 2021

QUALCOMM Has A Solid Track Record

The company has an extended history of paying stable dividends. The first annual payment during the last 10 years was US$0.76 in 2011, and the most recent fiscal year payment was US$2.72. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see QUALCOMM has been growing its earnings per share at 16% a year over the past five years. QUALCOMM definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

QUALCOMM Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that QUALCOMM is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for QUALCOMM that investors should know about before committing capital to this stock. We have also put together a list of global stocks with a solid dividend.

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