Advertisement
New Zealand markets open in 5 hours 1 minute
  • NZX 50

    12,184.49
    +61.35 (+0.51%)
     
  • NZD/USD

    0.6041
    -0.0037 (-0.60%)
     
  • ALL ORDS

    8,243.30
    -19.10 (-0.23%)
     
  • OIL

    80.92
    -0.99 (-1.21%)
     
  • GOLD

    2,463.50
    +34.60 (+1.42%)
     

Taiwan Semiconductor Manufacturing Co Ltd's Dividend Analysis

Exploring the Dividend Dynamics of a Semiconductor Giant

Taiwan Semiconductor Manufacturing Co Ltd (NYSE:TSM) recently announced a dividend of $0.56 per share, payable on 2024-07-11, with the ex-dividend date set for 2024-06-13. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Taiwan Semiconductor Manufacturing Co Ltd's dividend performance and assess its sustainability.

What Does Taiwan Semiconductor Manufacturing Co Ltd Do?

ADVERTISEMENT

Taiwan Semiconductor Manufacturing Co. is the world's largest dedicated chip foundry, with almost 60% market share. Founded in 1987 as a joint venture of Philips, the government of Taiwan, and private investors, it went public as an ADR in the U.S. in 1997. TSMC's scale and high-quality technology allow the firm to generate solid operating margins, even in the highly competitive foundry business. The shift to the fabless business model has created tailwinds for TSMC. The foundry leader has an illustrious customer base, including Apple, AMD, and Nvidia, that looks to apply cutting-edge process technologies to its semiconductor designs. TSMC employs more than 73,000 people.

Taiwan Semiconductor Manufacturing Co Ltd's Dividend Analysis
Taiwan Semiconductor Manufacturing Co Ltd's Dividend Analysis

A Glimpse at Taiwan Semiconductor Manufacturing Co Ltd's Dividend History

Taiwan Semiconductor Manufacturing Co Ltd has maintained a consistent dividend payment record since 2016, with dividends currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Taiwan Semiconductor Manufacturing Co Ltd's Dividend Analysis
Taiwan Semiconductor Manufacturing Co Ltd's Dividend Analysis

Breaking Down Taiwan Semiconductor Manufacturing Co Ltd's Dividend Yield and Growth

As of today, Taiwan Semiconductor Manufacturing Co Ltd has a 12-month trailing dividend yield of 1.12% and a 12-month forward dividend yield of 1.45%. This suggests an expectation of increased dividend payments over the next 12 months. However, the current yield of 1.12% is near a 10-year low and underperforms 56.17% of global competitors in the Semiconductors industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.

Over the past three years, Taiwan Semiconductor Manufacturing Co Ltd's annual dividend growth rate was 4.80%. Extended to a five-year horizon, this rate decreased to 4.30% per year. And over the past decade, Taiwan Semiconductor Manufacturing Co Ltd's annual dividends per share growth rate stands at an impressive 15.70%.

Based on Taiwan Semiconductor Manufacturing Co Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Taiwan Semiconductor Manufacturing Co Ltd stock as of today is approximately 1.38%.

Taiwan Semiconductor Manufacturing Co Ltd's Dividend Analysis
Taiwan Semiconductor Manufacturing Co Ltd's Dividend Analysis

The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. As of 2024-03-31, Taiwan Semiconductor Manufacturing Co Ltd's dividend payout ratio is 0.37, indicating a healthy balance between retaining earnings for growth and rewarding shareholders.

Taiwan Semiconductor Manufacturing Co Ltd's profitability rank of 10 out of 10 as of 2024-03-31, combined with a consistent record of positive net income over the past decade, underscores its robust profitability.

Growth Metrics: The Future Outlook

Taiwan Semiconductor Manufacturing Co Ltd's strong growth rank of 10 out of 10 highlights its promising growth trajectory. The company's revenue per share and 3-year revenue growth rate of approximately 17.30% per year significantly outperforms 72.37% of global competitors. Additionally, its 3-year EPS growth rate of about 18.90% per year and a 5-year EBITDA growth rate of 23.80% further solidify its capacity for sustaining dividends.

In conclusion, Taiwan Semiconductor Manufacturing Co Ltd's consistent dividend payments, robust payout ratio, and strong growth metrics paint a promising picture for both current shareholders and potential investors. With a solid track record and a strategic position in the semiconductor industry, TSM remains a compelling candidate for those looking to enhance their investment portfolio. GuruFocus Premium users can further explore high-dividend yield opportunities using the High Dividend Yield Screener.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.

This article first appeared on GuruFocus.