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Qualcomm Jacks Up Dividend, Unveils Big Buyback

Posted
3/5/2013 5:49:00 PM
By: Investor's Business Daily
Referenced Stocks:CSCO;INTC;MSFT;QCOM

Technology stocks historically haven't been what comes to mind when investors think of income stocks. But a number of big-cap techs do pay dividends.

Wireless chip companyQualcomm ( QCOM ) is one such issue. On Tuesday, the San Diego-based firm announced a large dividend hike and a new multibillion-dollar share buyback program.

Qualcomm will raise its quarterly dividend to 35 cents a share, up 40% from its prior payout of 25 cents. That's one of its biggest hikes since the company started paying shareholders dividends back in 2003.

"Our business model continues to generate strong operating cash flows that enable us to invest in and execute on our strategic priorities, while also returning capital to stockholders," said Paul Jacobs, Qualcomm's CEO and chairman, in a news release.

At the new rate, Qualcomm pays $1.40 on an annual basis. That gives the stock a yield of about 2.1%, which is lower than that of Cisco Systems ( CSCO ),Intel ( INTC ) andMicrosoft ( MSFT ). But Qualcomm offers more robust top- and bottom-line growth.

Qualcomm also unveiled a $5 billion stock repurchase program Tuesday. The new buyback replaces a $4 billion repurchase plan that had $2.5 billion remaining. There is no expiration date on the new program.

In late January, the company cruised past expectations with fiscal Q1 earnings that jumped 30% to $1.26 a share.

Sales, which also beat views, grew 29% to $6.02 billion. The profit and revenue increases were the highest in several quarters.

Qualcomm also raised its full-year outlook for earnings and sales as it issued its Q1 report.