Dividend stocks are everywhere, but many just downright stink. In some cases, the business model is in serious jeopardy, or the dividend itself isn’t sustainable. In others, the dividend is so low, it’s not even worth the paper your dividend check is printed on. A solid dividend strikes the right balance of growth, value, and sustainability.
Today, and one day each week for the rest of the year, we’re going to look at one dividend-paying company that you can put in your portfolio for the long term without too much concern. This isn’t to say that these stocks don’t share the same macro risks that other companies have, but they are a step above your common grade of dividend stock. Check out last week’s selection.
This week, we’ll dive back into the high-growth tech sector and have a look at why processing and graphics chip maker NVIDIA Corporation (NASDAQ:NVDA) makes for a delectable income play for investors.
Things are getting chippy
There are two primary downsides to the chip industry: The cyclicality of the tech replacement cycle makes steady growth a serious challenge, and it requires constant innovation just to keep up with the curve. Simply staying the course isn’t enough to keep a technology company in the spotlight anymore.
Advanced Micro Devices, Inc. (NYSE:AMD), for instance, bet its chips (pun intended) on the next-generation gaming consoles, winning a spot in both the new Microsoft Corporation (NASDAQ:MSFT) Xbox One and
Another example is QUALCOMM, Inc. (NASDAQ:QCOM), which is threatening to completely unseat the need for radio-frequency chip provider in 4G LTE-capable devices starting in the second-half of the year. QUALCOMM, Inc. (NASDAQ:QCOM) introduced a new all-in-one chip known as the RF360 in February which can handle RF signals on the front-end and could seriously put a dent into RF manufacturers like TriQuint Semiconductor (NASDAQ:TQNT) which has manufacturing deals currently in place with Apple Inc. (NASDAQ:AAPL) and Samsung for use in their smartphones.
A clear-cut winner
I’ve said it previously, and I’ll say it again: The allure of NVIDIA Corporation (NASDAQ:NVDA) has little to do with its still dominant graphics chip line and everything to do with the potential for its LTE-capable Tegra 4i line of smartphone and tablet processing chips.
Although many tech reports have claimed that the Tegra 4i is quite the battery hog, it also gives QUALCOMM, Inc. (NASDAQ:QCOM) a run for its money with regard to processing graphics — especially for consumers who use their phone as a gaming or movie-viewing device. That really shouldn’t come as a surprise, as NVIDIA Corporation (NASDAQ:NVDA) has focused its efforts for more than a decade on improving graphics quality in PCs and laptops.
Despite being a relatively new entrant into the smartphone and tablet market, NVIDIA Corporation (NASDAQ:NVDA) has been well accepted. Year-over-year growth in 2012 was mostly flat, with the company transitioning from its Tegra 3 to next-generation Tegra 4 chips, but that’s still a lot better than I can say for some of its peers. Intel Corporation (NASDAQ:INTC) , a company that I think has a strong future tied to smartphone and tablet hardware as well as cloud computing, saw its market share tick up by just 0.2% in 2012, according to Strategy Analytics. Furthermore, Broadcom Corporation (NASDAQ:BRCM), which has significantly more market share than NVIDIA, will slowly cede that share over time in the U.S., since its processing chips are often found in older 3G-capable smartphones.