Join        Login             Stock Quote

Qualcomm: Ahead Of The Curve

 April 09, 2012 11:23 AM

by Chuck Carlson, editor DRIP Investor

While Apple's dividend has garnered a lot of attention, one tech stock that has been ahead of the curve in terms of giving its shareholders dividends is Qualcomm (QCOM).

The company has been paying a quarterly dividend since 2003. Reflecting strong operating performance, the company recently boosted its dividend 16% to a quarterly rate of $0.25 per share.

Given the company's strong growth potential — per-share pro? ts should show double-digit growth this year and next — and healthy ?nancial position — cash and investments totaled nearly $22 billion at the end of December, with no long-term debt on the books — dividend hikes should continue at a brisk pace.

Qualcomm has its tentacles in nearly every rapid growth area in the technology sector, which makes these shares an attractive play for the next 12 months.

And the ?rm's technological prowess should assure it remains a relevant player for the long term. The stock is up more than 22% this year, but I believe there is plenty more upside for these shares. Buy Qualcomm now.

Qualcomm is the world's largest fabless semiconductor producer and the largest provider of wireless chipset and software technology.

Its technology powers the majority of all 3G devices commercially available today. Qualcomm technology can be found in a host of mobile devices, including Apple's iPhone 4S and new 4G iPad.

Qualcomm's revenue stream is supported by an annuity- like licensing business. Overseas business, especially in emerging markets, should continue to expand at a rapid rate as smartphones gain greater penetration.

A big reason Qualcomm has been able to stay on the cutting edge of fast-moving technology markets is its devotion to research and development.

The ?rm spends some 20% of revenue on R&D. Supporting that hefty R&D spending is a pristine balance sheet. The company has about $13 per share in cash and investments and virtually no debt.

That ?nancial ?repower is one reason the ?rm has been able to more than double its quarterly dividend since 2007. Strong ?nances have also permitted stock buybacks. The ? rm recently announced a new $4 billon buyback plan.

Qualcomm is not bargain-basement priced. The stock trades at 18 times the consensus 2012 earnings estimate of $3.75 per share. However, given the company's growth opportunities, I view that as a reasonable multiple to pay for these shares.

Qualcomm has beaten the consensus earnings estimate in each of the last four quarters, so that $3.75 ?gure may prove conservative. Investors would be wise to at least nibble on Qualcomm at current prices and buy more aggressively on price breaks below $60.

Please note that Qualcomm offers a direct-purchase plan whereby any investor may buy the ?rst share and every share of stock directly from the company. Minimum initial investment is $500.



Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageTackling China's Debt Problem: Can Debt-Equity Conversions Help?

China’s high and rising corporate debt problem and how best to address it has received much attention read on...

article imageWill Job Growth Kill The Bear-Market Signal For Stocks?

It’s all about jobs now. Actually, it’s always been about jobs. But the stakes are even higher—perhaps more read on...

article imageAutomating Ourselves To Unemployment

In this current era of central planning, malincentives abound. We raced to frack as fast we could for the read on...

article imageFed: Waiting For June… Or Godot?

The Federal Reserve left interest rates unchanged yesterday, as widely expected. But the possibility of a read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.