In this article, we discuss 10 semiconductor stocks that pay dividends. You can skip our detailed analysis of the semiconductor industry and its past performance, and go directly to read 5 Semiconductor Stocks that Pay Dividends.
The U.S. semiconductor industry is the global market leader, making up 47% of global sales since the 1990’s, as reported by the Semiconductor Industry Association. In addition to this, U.S. firm have a leading position in the Research & Development, design, and manufacturing process technologies that are driving the industry forward. In today’s world, the demand for chips has reached beyond electronics and into electric vehicles and industrial machinery, among other uses.
The semiconductor sector suffered a lot due to the pandemic in 2020, as consumers shifted their attention towards goods and away from services. However, the demand for semiconductors chips is increasing as supply chain issues ease post-pandemic. According to a report by Bloomberg, the semiconductor market is expected to grow at a CAGR of 7.4% from 2022 to 2029, reaching $1 trillion. This growth will be driven by expanding digitalization, artificial intelligence, machine learning, and cloud computing in nearly every industrial and economic sector. In addition to this, the U.S. government recently passed a $52 billion CHIPS-Plus Act to enhance semiconductor manufacturing in the U.S., which reflects both the sector’s growth prospects as well as its vital role in several important areas of society.
Semiconductor stocks are attracting attention as digitalization drives the sector to new heights in terms of growth and innovation. According to a survey conducted by KPMG, 95% of the semiconductor leaders expect their companies’ revenue to grow and 68% of them forecast growth of 11% or more. Moreover, the Philadelphia Semiconductor Index, which covers the 30 largest U.S. companies involved in the manufacturing and selling of semiconductor products, gained 2.32% in the last month, while its 3-month returns came in at 0.58%, as of the close of August 22.
Due to semiconductor stocks’ recent rebound, analysts are also presenting a positive outlook on the industry. Fiona Cincotta, a senior analyst at City Index Ltd., said in her Bloomberg interview that investors are seeking industries that are still providing opportunities. She further mentioned that as businesses are looking to update their cloud computing and AI operations, the demand for chip stocks is likely to grow in the coming months. Some of the names in this important field are Intel Corporation (NASDAQ:INTC), Broadcom Inc. (NASDAQ:AVGO), and Analog Devices, Inc. (NASDAQ:ADI) among others that are discussed below.
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Our Methodology:
The semiconductor stocks mentioned below pay dividends to shareholders. We chose these stocks based on their basic business fundamentals, dividend policies, and strong balance sheets. In addition to this, we also considered the hedge fund sentiment around each stock according to our Q2 database of 895 elite funds.
10 Semiconductor Stocks that Pay Dividends
10. NVIDIA Corporation (NASDAQ:NVDA)
Dividend Yield as of August 23: 0.09%
NVIDIA Corporation (NASDAQ:NVDA) is a California-based tech company that provides automated inspection solutions for manufacturing semiconductors. In Q1 2022, the company reported revenue of $8.2 billion, which represented 46.3% growth from the same period last year. The company’s bottom line performance was strong, as it generated $1.7 billion in operating cash flow and $1.3 billion in free cash flow. In addition to this, it returned $2.1 billion to shareholders in share repurchases and dividends in Q1. NVIDIA Corporation (NASDAQ:NVDA) currently pays a quarterly dividend of $0.04 per share, giving its shares a yield of 0.09%, as recorded on August 23.
In August Truist highlighted the constructive demand for the AI and Data Canter segments of NVIDIA Corporation (NASDAQ:NVDA). In view of this, the firm set a $216 price target on the stock with a ‘Buy’ rating on the shares.
According to Insider Monkey’s Q2 2022 data, 84 hedge funds owned stakes in NVIDIA Corporation (NASDAQ:NVDA), down from 102 in the previous quarter. The total worth of these stakes stood at over $3.3 billion. Citadel Investment Group was the company’s leading stakeholder in Q2.
In addition to Intel Corporation (NASDAQ:INTC), Broadcom Inc. (NASDAQ:AVGO), and Analog Devices, Inc. (NASDAQ:ADI), NVDA is another prominent semiconductor stock to consider.
ClearBridge Investments mentioned NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2022 investor letter. Here is what the firm had to say:
“Chipmaker Nvidia (NASDAQ:NVDA) has also been pressured by multiple compression of higher growth companies and weakness in its gaming business. While Nvidia has grown into a top 10 position with its strong performance through late 2021, we have been consistently trimming the position to derisk against short-term volatility in its gaming business. The company is clearly exposed to the semiconductor cycle but also participates in the secular growth of cloud and AI adoption through its data center business. With these secular drivers intact and new products ramping up in the second half of the year, we are maintaining an overweight to the company.”
9. Marvell Technology, Inc. (NASDAQ:MRVL)
Dividend Yield as of August 23: 0.46%
Marvell Technology, Inc. (NASDAQ:MRVL) is an American tech company that develops and produces semiconductors and related technologies. In July, Benchmark initiated its coverage of the stock with a ‘Buy’ rating and a $70 price target, highlighting the company’s focus on infrastructure, which represents 88% of its revenue.
In Q1 2022, Marvell Technology, Inc. (NASDAQ:MRVL)’s revenue grew by 74% year-over-year to $1.47 billion. The company’s operating cash flow came in at over $194.8 million and its free cash flow stood at $156.3 million. It ended the quarter with $465 million available in cash and cash equivalents and total assets worth over $22 million.
On June 2, Marvell Technology, Inc. (NASDAQ:MRVL) declared a quarterly dividend of $0.06 per share, in line with its previous dividend. The stock’s dividend yield was recorded at 0.46% on August 23.
As of the close of Q2 2022, 63 hedge funds tracked by Insider Monkey were bullish on Marvell Technology, Inc. (NASDAQ:MRVL), the same as in the previous quarter. The stakes owned by these hedge funds held a value of nearly $1.6 billion.
ClearBridge Investments mentioned Marvell Technology, Inc. (NASDAQ:MRVL) in its Q4 2021 investor letter. Here is what the firm had to say:
“The ClearBridge Mid Cap Growth Strategy continued to deliver strong absolute and relative returns as our focus on de-risking investments prior to purchase and managing position sizes has made a difference through recent market turbulence. Marvell Technology, a leader in semiconductor manufacturing, is in the second-largest position in the Strategy but just one of three stocks with a weighting of over 3% in a diversified growth portfolio of over 70 names. With a wide range of exposure to fast-growing IT subsectors, including 5G telecommunications, data centers, cloud computing, and electric vehicles, Marvell’s ability to secure a crucial supplier position at the nexus of these technologies leaves it well-positioned to participate in their long-term growth. Strength in companies like Marvell offset weakness in higher multiple growth names that were dragged down by negative sentiment or short-term execution issues.”
8. Monolithic Power Systems, Inc. (NASDAQ:MPWR)
Dividend Yield as of August 23: 0.60%
Monolithic Power Systems, Inc. (NASDAQ:MPWR) is a Washington-based high-performance analog semiconductor company that operates in over 15 countries worldwide. The stock attracted hedge funds’ attention in Q2, as 36 of the funds tracked by Insider Monkey’s database owned positions in the company, growing from 29 in the previous quarter. Among these hedge funds, Whale Rock Capital Management owned the largest stake in the company, worth nearly $280 million.
In the first half of 2022, Monolithic Power Systems, Inc. (NASDAQ:MPWR) had $343 million available in cash and cash equivalents, up from $190 million at the end of December. The company’s revenue for the second quarter also jumped by 57.2% year-over-year to $461 million. In the third quarter, the company expects revenue in the range of $480 million to $500 million versus the consensus of $400 million.
In August, Cowen named Monolithic Power Systems, Inc. (NASDAQ:MPWR) one of its Top Picks in the industry and raised its price target on the stock to $600 while maintaining an ‘Outperform’ rating on the shares. Monolithic Power Systems, Inc. (NASDAQ:MPWR) pays a quarterly dividend of $0.75 per share, raising it by 25% in February. The stock’s dividend yield stood at 0.60%, as of August 23.
7. Micron Technology, Inc. (NASDAQ:MU)
Dividend Yield as of August 23: 0.79%
Micron Technology, Inc. (NASDAQ:MU) is an Idaho-based semiconductor manufacturing company. It initiated a dividend policy in 2021 and has raised its dividend once since then. The company pays a quarterly dividend of $0.115 per share, giving MU shares a dividend yield of 0.79%, as recorded on August 23.
In its fiscal Q3 of 2022, Micron Technology, Inc. (NASDAQ:MU) reported operating cash flow of $3.8 billion, up from $3.6 billion in the previous quarter. The company’s revenue saw a 16.4% year-over-year growth to $8.6 billion. Its free cash flow stood at $1.31 billion and it paid $335 million in dividends to shareholders during the quarter.
Due to the company cutting its outlook, Mizuho lowered its price target on Micron Technology, Inc. (NASDAQ:MU) in August to $75 but maintained a ‘Buy’ rating on the share, appreciating the company’s fundamentals.
As per Insider Monkey’s database, 69 hedge funds reported owning stakes in Micron Technology, Inc. (NASDAQ:MU), falling from 78 in the previous quarter. Those stakes held a total value of over $2.1 billion.
6. KLA Corporation (NASDAQ:KLAC)
Dividend Yield as of August 23: 1.43%
KLA Corporation (NASDAQ:KLAC) is a California-based manufacturing company that supplies process control and yield management systems for the semiconductor industry. The stock’s price target was raised by Deutsche Bank in July to $400 with a ‘Buy’ rating on them as the company reported strong earnings in its recent quarter. Other semiconductor stocks like Intel Corporation (NASDAQ:INTC), Broadcom Inc. (NASDAQ:AVGO), and Analog Devices, Inc. (NASDAQ:ADI) are also attracting positive ratings from analysts.
In its fiscal Q4 of 2022, KLA Corporation (NASDAQ:KLAC) delivered operating cash flow of $819 million, while its free cash flow stood at $746 million. The company’s capital returns for the quarter came in at $3.63 billion. It generated $2.49 billion in revenues, which showed 29% growth from the same period last year.
On August 4, KLA Corporation (NASDAQ:KLAC) declared a 24% hike in its quarterly dividend to $1.30 per share. This marked the company’s 13th consecutive year of dividend increases. The company has raised its payouts at a CAGR of 17.1% over the last 5 years. As of August 23, the stock’s dividend yield was recorded at 1.43%.
At the end of Q2 2022, 43 hedge funds tracked by Insider Monkey’s database owned stakes in KLA Corporation (NASDAQ:KLAC), down from 52 in the previous quarter. The collective value of those stakes was over $1.3 billion. With over 1.7 million KLAC shares, Alkeon Capital Management became the company’s leading stakeholder in Q2.
Vltava Fund mentioned KLA Corporation (NASDAQ:KLAC) in its Q1 2022 investor letter. Here is what the firm had to say:
“We then used the money freed up to, among other things, open three new positions. The stock price declines during the Russian invasion brought a lot of good prices to the market. Out of all the possibilities we considered, we picked the stock of KLA Corporation (KLAC).
KLA Corporation develops leading-edge equipment and services that enable innovation throughout the electronics industry. It specialises in process management and control in semiconductor manufacturing and the related nanoelectronics industries. During manufacturing processes, products must be inspected for defects and correct critical dimensions in order to identify and eliminate possible sources of problems. As customers continue to enforce Moore’s Law, smaller chips must meet more precise specifications, which in turn increases the need for advanced inspection and diagnostic tools. This is a key step within the entire manufacturing process and one in which the company has built a very strong, and in places dominant, global position. We have been watching and waiting for an opportunity to acquire this stock for some time already, and this year’s drop in its price finally prompted us to buy.”
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Disclosure. None. 10 Semiconductor Stocks that Pay Dividends is originally published on Insider Monkey.
