Yahoo Finance NXP Semiconductors' (NASDAQ:NXPI) Dividend Will Be $1.01
The board of NXP Semiconductors N.V. (NASDAQ:NXPI) has announced that it will pay a dividend on the 9th of October, with investors receiving $1.01 per share. The dividend yield will be 1.6% based on this payment which is still above the industry average.
Check out our latest analysis for NXP Semiconductors
NXP Semiconductors' Earnings Easily Cover The Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, NXP Semiconductors was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share is forecast to rise by 46.2% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.
NXP Semiconductors Doesn't Have A Long Payment History
It is great to see that NXP Semiconductors has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2018, the dividend has gone from $1.00 total annually to $4.06. This implies that the company grew its distributions at a yearly rate of about 26% over that duration. NXP Semiconductors has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.
The Dividend Has Growth Potential
The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that NXP Semiconductors has been growing its earnings per share at 8.8% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for NXP Semiconductors' prospects of growing its dividend payments in the future.
We Really Like NXP Semiconductors' Dividend
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 3 warning signs for NXP Semiconductors that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
