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Avago Technologies Keeps Sweetening Its Dividend

By: Investor's Business Daily
Posted: 10/3/2013 5:18:00 PM
Referenced Stocks: AAPL;AVGO;SIMO

Singapore-based chip designerAvago Technologies ( AVGO ) has been raising its dividend often.

In the past year and a half, the company has bumped up its quarterly dividend six times. It tends to raise the amount by a penny or two at a time.

The company most recently increased its dividend in early September, raising the quarterly payment to 23 cents a share from 21 cents.

Avago's dividend has more than tripled since it first gave shareholders a dividend in December 2010.

At the new rate, Avago's annualized dividend equates to 92 cents a share, for a yield of about 2.1%, which is among the best in the Electronics-Semiconductor Fabless industry group. But it is lower than that of the S&P 500's yield.Silicon Motion Technology ( SIMO ), a Taiwanese chip designer, has the highest yield in the group at 3.4%.

Besides dividends, Avago has also returned cash to shareholders through stock buybacks. In April, the company unveiled a repurchase program for 20 million of its own shares.

Avago's earnings and sales fell in 2009, but both have grown each year since. Analysts polled by Thomson Reuters see profit rising 2% this year. Growth is expected to pick up to 14% in 2014. Both estimates were recently revised to the upside.

Because of the drop in earnings in 2009, Avago's five-year Earnings Stability Factor is 34 on a scale of 0 to 99 in which smaller numbers represent steady performance. Avago's three-year Earnings Stability Factor is a much better 9.

About 41% of Avago's sales come from China. The U.S. accounted for about 16% of total revenue in 2012. Its top 10 customers made up 62% of total sales.

Avago's stock has perked up in recent weeks, partly due to news that its parts are inApple's ( AAPL ) new iPhone 5S and 5C models.