While cash flows can come from bond interest or other types of investments, income-oriented investors favor dividends. A dividend is the coveted distribution of a company's earnings to shareholders, and investors often watch it on its dividend yield, a measure that measures the dividend as a percentage of the current stock price. Many academic studies show that dividends are an important part of long-term returns and in many cases their contributions exceed one-third of total returns.
Qualcomm in brief
Qualcomm (QCOM – Free Report), headquartered in San Diego, is a technology and IT company that has seen a 10.68% price change since the beginning of the year. Currently distributing a dividend of $ 1.24 per share, the company has a dividend yield of 4.88%. In comparison, the performance of the wireless equipment sector is 0.4%, while that of the S & P 500 is 1.95%.
Examining the company's dividend growth, its current annualized dividend of $ 2.48 is up 4.2% over last year. Over the last 5 years, Qualcomm has increased its dividend five times over twelve months, an average annual increase of 10.83%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of annual earnings per share of a company that it distributes in the form of dividend. The current distribution ratio of Qualcomm is 73%. This means that he paid 73% of his last 12-month EPS in the form of a dividend.
Profit growth seems solid for QCOM for this year. The Zacks consensus estimate for 2019 stands at $ 3.87 per share, representing a year-on-year growth rate of 4.88%.
Investors like dividends for several reasons. they significantly improve equity profits, reduce overall portfolio risk and provide tax benefits, among others. It is important to keep in mind that not all companies provide a quarterly payment.
Large, well-established companies offering safer profits are often considered the best dividend options, but it is rare to see high-growth companies or start-ups in the technology sector offering a dividend to their peers. shareholders. Income investors need to be aware that high-yielding stocks tend to struggle in times of rising interest rates. With this in mind, QCOM is an attractive investment opportunity. Not only is the dividend strong, but the stock currently ranks 3 for Zacks (maintain).