Best Chip Stocks With Dividends: Microchips powered by semiconductors are the brains behind our most powerful computer applications. Advanced technologies like artificial intelligence (itself a $2.9 trillion industry), blockchain, and cloud computing are more easily accessible to the general population.
This is because over 5 billion people around the world have access to a connected mobile device. In fact, mobile traffic accounts for over half of all internet usage, and these devices are all powered by microchips.
If you’re looking for a future-proof industry, computer chips are the way to go, as they’ve been necessary in every generation of computers since the beginning.
There are plenty of chip companies these days, and each has strengths and weaknesses based on their holdings, contracts, and other assets. Here are the best chip stocks to buy based on dividend payment history, which may play a factor in your decision.
Lam Research Pays 1.35% Dividend
Lam Research (NASDAQ:LRCX) designs and builds the equipment used in semiconductor and LED manufacturing, including thin film deposition, plasma etching, and wafer cleaning.
It also has a Lam Capital investment arm that it uses to invest in companies without violating antirust laws. This is because it has such a large industry footprint through its acquisitions through the 2000s and 2010s, including Bullen Semiconductor, SEZ AG, Novellus Systems, and chip simulation firm Coventor.
However, the company has new leadership in Tim Archer as President, CEO, and board member after former CEO Martin Anstice resigned over personal misconduct allegations.
Despite a brief dip in 2019 as Archer gained his footing (and the COVID-19 market crash), Lam Research is experiencing all-time highs in 2020. With a focus on sustainability, Lam’s customers include Samsung and Taiwan Semiconductor Manufacturer (TSM), which are both giants in the space.
Not only are global lockdowns and virtual school/work fueling growth in the sector, but the 5G revolution and hyperscale computing in the form of blockchains and cloud computing becoming more prolific are giving Lam Research a lift.
Its most recent development deal with additive manufacturer VELO3D keeps Lam on the cutting edge of manufacturing technology. It also keeps revenue coming, which allowed the company’s board to approve a 13% increase in its quarterly dividend.
That means it’s raising from $1.15 to $1.30 per share of common stock. The dividend is paid on October 14 to anyone holding shares as of September 30, 2020. In fact, the company has consistently paid its investors a healthy quarterly dividend, with only a handful of missed opportunities in the past five years.
But Its strong reported revenue and projections, along with growth in emerging Industry 4.0 and high-technology areas, give investors a strong bullish outlook on Lam Research Corporation for the remainder of 2020. There’s a good chance it’ll continue paying dividends through 2021 too.
Will Broadcom Win 5G?
Broadcom (NASDAQ:AVGO) has a wide portfolio of infrastructure applications and is integrated into broadband modems, Wi-Fi, Bluetooth, Optical Sensing, ARM CPUs, RF Front-Ends, and more. It’s also the owner of the Symantec enterprise security software brand and was initially started as a semiconductor division of Hewlett Packard before separating in 1999.
Through a series of mergers and acquisitions (including Avago, CA Technologies, Infineon Technologies, and more), the company became so massive it drew the attention of the European Union’s antitrust commission in October 2019.
Still, Broadcom outpaced the stock market in the aftermath of the novel coronavirus pandemic. This is because much of its equipment focuses on networking semiconductors, which demand grew for as businesses scrambled to keep their employees online in a virtual work environment.
This helped the company increase its revenues (albeit by only 2 percent from the same time last year) and maintain a steady cash flow that helped retain the same buying power it’s accustomed to.
The year hasn’t been completely drama-free. Smartphone and automotive industries are seeing a slump, and Broadcom has major customers in each of these industries. However, the rise of 5G and cloud-based computing isn’t stopping anytime soon, and the company can easily pivot to service whatever needs arise in the coming years.
CEO Hock E Tan shook things up toward the end of August by selling $19.2 million of his personal shares. This came as the company’s ASIC and security businesses are making large strides. Despite its prowess, Broadcom isn’t without competition – Marvell (NASDAQ:MRVL), NVIDIA (NASDAQ:NVDA), and our next chip stock are all looking to take a piece of the company’s broad-reaching pie.
Skyworks Solutions Rules RF & Mobile
Skyworks Solutions (NASDAQ:SWKS) is a semiconductor company focused on radio frequency (RF) and mobile communications systems.
It creates everything from amplifiers and attenuators to diodes, demodulators, optocouplers, isolators, and more. In fact, you may have seen the Skyworks chip plant featured in The Postal Service’s music video for “Such Great Heights.”
Like the others on this list, Skyworks recovered well from the coronavirus pandemic and was considered undervalued for the majority of 2020.
The company has strong earnings and paid about $1.76 per share cash dividend over the past 12 months. The outlook is great for at least one (if not two) dividends to head toward shareholders before the end of the year.
This is because Skyworks is deeply embedded in the emerging 5G market, which has giants like Verizon, AT&T, Apple, Google, and Samsung all heavily focused on.
While the infrastructure buildout is costing a lot of money, Skyworks is one of the suppliers earning that money.
Look for any 5G- and mobile-communications companies to perform well over the next few years as companies rush to complete their 5G wireless networks. This, along with the growth of municipal IoT, will drive the future of the chip business.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.