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QUALCOMM’s (NASDAQ:QCOM) Upcoming Dividend Will Be Larger Than Last Year’s

QUALCOMM Incorporated (NASDAQ:QCOM) will increase its dividend to US$0.68 on December 16. This brings the dividend yield to 2.1%, which is above the industry average.

Check out our latest analysis for QUALCOMM

QUALCOMM’s earnings easily cover benefits

We like to see robust dividend yields, but that doesn’t matter if the payout isn’t sustainable. Prior to this announcement, however, QUALCOMM’s dividend was amply covered by both cash flow and earnings. As a result, much of what it earned was reinvested in the company.

Earnings per share will decline by 5.1% over the next 12 months. If the dividend continues down the path it has been in lately, we estimate the payout ratio could be 37%, which is comfortable for the company to continue going forward.

NasdaqGS:QCOM Historic Dividend October 16, 2021

QUALCOMM has a solid track record

The company has been paying dividends for a long time and it has remained quite stable, which gives us confidence in its future dividend potential. Since 2011, the first annual payment was $0.76, compared to the most recent full-year payment of $2.72. This means that the company has grown its payouts at an annual rate of approximately 14% over that period. It is good to see that there is strong dividend growth and that there have been no cuts for a long time.

Dividend looks likely to grow

Investors who have held stock in the company in recent years will be pleased with the dividend income received. We are encouraged to see QUALCOMM’s earnings per share growing 19% per year over the past five years. A low payout ratio and decent growth suggest that the company is reinvesting well and that it also has plenty of room to increase its dividend over time.

We really like the QUALCOMM dividend

In general, a dividend hike is always a good thing, and we think QUALCOMM is a strong earnings stock thanks to its track record and rising earnings. The income easily covers the distributions of the company and the company generates a lot of money. If earnings fall in the next 12 months, the dividend could come under a bit of pressure, but we don’t think it will be too much of a problem in the long run. Taking all these factors into account, we think this has solid potential as a dividend stock.

Market movements testify to how highly valued a consistent dividend policy is compared to one that is more unpredictable. At the same time, there are other factors that our readers should be aware of before putting capital into a stock. For example, we selected 1 warning sign for QUALCOMM that investors should be aware of before investing capital on this stock. If you are a dividend investor, you may also want to check out our curated list of high-performing dividend stocks.

This article from 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 shares and does not take into account your objectives or your financial situation. We strive to provide you with long-term focused analysis powered by fundamental data. Please note that our analysis may not take into account the latest price sensitive company announcements or quality material. Simply Wall St has no position in said stocks.

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