5 Best NASDAQ Dividend Stocks To Buy

4. Texas Instruments Incorporated (NASDAQ:TXN)

Number of Hedge Fund Shareholders: 55

Dividend Yield: 3.07%

Texas Instruments Incorporated (NASDAQ:TXN) is raising its dividend by 7.8% to $1.24 beginning with its next payment on November 15, which had an ex-dividend date of October 28. The chipmaker has grown its dividend at a strong CAGR of 17.2% over the past five years and has a payout ratio of less than 50%.

While Texas Instruments isn’t being hit as hard as some chipmakers given its lighter exposure to the weakening PC market, the company’s earnings per share are still expected to slump by as much as 19% year-over-year in the fourth quarter due to broad weakness in the chip market. Analysts expect Texas Instrument’s earnings to slump by another 13% next year. With TXN shares at depressed levels and the company having very shareholder-friendly policies, it’s a dividend stock worth being bold on now.

Texas Instruments Incorporated (NASDAQ:TXN) has consistently ranked among the second tier of most popular stocks among hedge funds over the last five years, never cracking the top 30, but being comfortably within the top 100. First Eagle Investment Management and Ric Dillon’s Diamond Hill Capital both own substantial stakes in TXN as of June 30.

The Davis Opportunity Fund discussed the strong competitive position that semicondustor companies like Texas Instruments Incorporated (NASDAQ:TXN) have over their smaller rivals in the fund’s Q4 2021 investor letter:

“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel, Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”