A Mature Qualcomm Offers A Growing Dividend

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Qualcomm ( QCOM ) was one of the great growth stories of the 1999 dot-com boom. Its stock blasted out of a base and soared more than 2,000% before finishing its big move with a spectacular climax run.

Times have changed. Today, Qualcomm is still on the cutting edge, but it's a mature company that pays a dividend.

Qualcomm makes chips and software for cellphones, whose carriers use either a CDMA or GSM platform. Most U.S. providers, such asVerizon ( VZ ), use CDMA.AT&T ( T ) and the rest of the world use GSM.

Qualcomm's chips are found in the iPhone and Samsung Galaxy and other Android devices.

In the most recent quarter, earnings fell 20% amid fears of slowing smartphone sales. But the stock quickly recovered and has moved higher despite a weaker market.

Analysts expect earnings to increase just 4% in the next report, but they see a 14% rise for the full year and a 12% increase in 2015.

The five-year annualized EPS growth rate is 21% and the Earnings Stability Factor is 6 on a 0 to 99 scale, with low numbers corresponding to steady earnings growth.

Qualcomm is in a hot industry group. As of Tuesday's IBD, the Electronics-Semiconductor Fabless industry group was ranked No. 13 out of 197 industry groups tracked by IBD. It was ranked No. 32 just six weeks ago.

The return on equity was an impressive 23% in 2013, well above the 17% benchmark investors should look for.

The company has no long-term debt.

Pretax margins last year were 38%, although that's the lowest in several years.

Qualcomm has offered a dividend since 2003, when it paid out 2.5 cents per share per quarter, adjusted for a stock split. That works out to a 2.1% annual yield.

The dividend is now 42 cents. The next dividend will be paid out June 25 to shareholders of record on June 2.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: QCOM , VZ , T

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