Applied Materials’ Battered Stock: Time to Buy?
Applied Materials (AMAT), the nation’s biggest maker of semiconductor-fabrication equipment, has one of the richest dividend yields among major technology companies., including Microsoft (MSFT), Intel (INTC), Hewlett-Packard (HPQ), Oracle (ORCL) and Apple (AAPL), which later this summer begins paying a quarterly dividend.
Since initiating a dividend in 2005, Applied Materials’ directors have been raising it pretty regularly, including a 13% increase in March.
Most of the time, Applied Materials’ dividend has been well covered by earnings.
Of course, the company’s dividend yield is relatively big these days in part because Applied Material shares have been depressed for some time.
Why? For one thing, despite some hefty investments, Applied Materials has had only limited success as a maker of equipment for companies that manufacture silicon-based solar-cell products; that adjacent market hasn’t fulfilled expectations so far.
For another, Applied Materials’ orders tend to lag the chip sector. Chipmakers are having a good run currently, with booming orders from smartphone and tablet makers driving higher volume. Now, as their chip “foundries” begin to run at close to full capacity, and as new designs require new production tools, semiconductor makers are ordering more of the chip-making equipment Applied Materials sells.
Applied Materials has been reducing shares outstanding, and announced a new $3 billion stock buyback program in March. That’ll give per-share earnings a little extra help.
As low interest rates have squelched many avenues for income investing, more investors are focusing on dividend stocks. Whenever we invest in a company for its dividend, of course, we’re also buying its underlying shares. Before investing in any stock, make sure to check out its fundamentals (YCharts can help with that) and read its 10-K report.
YCharts lets investors be their own stock analysts. With the best charts on the web and objective, intuitive information about more than 5,000 stocks, we give you the information that you need to understand the companies behind the stocks that you buy. Because when you understand the companies you buy, you are investing - in the truest sense of the word.
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