Credit: Shutterstock photoCalifornia-based semiconductor maker Xilinx Inc. 's ( XLNX ) board of directors recently approved a new share repurchase program. The latest buyback scheme reflects the company's sound financial position and favorable prospects.
The new authorization permits Xilinx to buyback a maximum of $800 million worth of its common stocks representing nearly 7% of its total outstanding shares at the closing price of $43.41 on Nov 17, 2014.
The company has a consistent track record of returning cash to its shareholders through share repurchase and dividend payouts. Since fiscal 2010, Xilinx has returned approximately $1.6 billion by repurchasing nearly 50 million shares.
Furthermore, the company has regularly paid quarterly cash dividends for the past 10 years and also increased the same. Xilinx started paying 5 cents per share as quarterly dividend in fiscal 2004 which has been increased every year to reach the current amount of 29 cents. This represents a compounded annual growth rate of approximately 19.2%.
During the first half of fiscal 2015, Xilinx returned approximately $301 million and $154 million to shareholders through share buyback and quarterly dividends, respectively.
Xilinx's strong balance sheet and cash flow provide it with the financial flexibility to undertake shareholder-friendly initiatives as well as scope for product innovation and expansion of operations in new markets. The company generated operating cash flow of $334 million in the first half of fiscal 2015 ending the period with cash, cash equivalents and short-term investments of nearly $2.6 billion.
Some other companies which have a consistent track record of returning excess through share repurchases and dividend payments include Yahoo! Inc. ( YHOO ), SanDisk Corporation ( SNDK ) and Accenture plc ( ACN ).
We believe that dividend payments and share repurchases not only enhance shareholder return but also raise the market value of the stock. Through dividend payouts, companies bolster investor confidence, persuading them to either buy or hold the scrip. Looking ahead, Xilinx remains confident of its growth potential, thereby raising hopes for further enhancement of shareholder value through dividend payouts and share buybacks.
Currently, Xilinx carries a Zacks Rank #3 (Hold).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
