Income investors seek safe and steady streams of dividends. Qualcomm’s dividend history is long and it might fit the mold. Let’s review the Qualcomm’s business, dividend history, and dividend payout safety going forward.
Qualcomm Business Snapshot
Qualcomm is a $92 billion business that’s based out of San Diego, California. The company employs 33,800 people and pulled in $22 billion in sales last year. That breaks down to $659,000 per employee – a healthy figure for a well-established business.
Qualcomm is a technology business that maintains a credit rating of A- from the S&P. This high credit rating allows Qualcomm to issue affordable debt to build its business and pay dividends.
In 2016, Qualcomm acquired NXP for $47 billion. This was a big move and it’ll help provide cash flow to finance Qualcomm’s dividends…
Qualcomm Dividend History 10-Years
Qualcomm gave out $0.60 per share 10 years ago. Over the last decade, the dividend has jumped to $2.2. That’s a 267% climb and you can see the annual changes below…
The compound annual dividend growth is 13.9% over 10 years… but over the last year, the dividend stepped up 8.9%. The decrease in dividend growth isn’t a great sign. Although, Qualcomm still might be a good income investment.
Qualcomm Current Dividend Yield vs. 10-Year Average
Qualcomm’s long history of paying dividends makes it one of the best dividend stocks around. This also makes the dividend yield a good sign of investment value. A higher dividend yield for Qualcomm is generally better for buyer.
The Qualcomm dividend yield is 3.94% and that’s above the 10-year average of 2.84%. The image below shows the dividend yield over the decade…
Qualcomm’s high-yield indicates that investors have pushed down the company’s market value. They might be expecting more growth and payouts. Although, more often than not, the dividend yield is mean reverting as the share price moves.
Improved Qualcomm Dividend Safety Check
The dividend payout ratio is one popular metric in determining dividend safety. The ratio shows the dividend payout divided by the net income. So a dividend payout ratio of 75% would mean that for every $1 Qualcomm earns, it give investors $0.75.
The dividend payout ratio is a solid indicator of Qualcomm’s dividend safety… but accountants manipulate net income. Goodwill and other non-cash items affect net income. An improved dividend safety ratio uses free cash flow.
Here’s the Qualcomm dividend payout ratio based on free cash flow over the last 10 years…
Qualcomm’s dividend payout ratio is up big over the last 10 years. The last reported year shows a payout ratio of 81.2%. This doesn’t give much wiggle room for Qualcomm’s board of directors to boost the dividend.
Closing Thoughts: Qualcomm Dividend History and Safety
Qualcomm’s dividend yield is high relative to its 10-year average, although it might not be safe going forward. The dividend payout ratio has skyrocketed and the trend can’t continue without solid cash flow improvement.
Are you interested in seeing better value dividend stocks in the current market? If so, check out: Best Dividend Stocks: Top Dividend Achievers List
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