Qualcomm boosts dividend, buying back more shares

Qualcomm raises dividend by 40 percent, buying back $5 billion of its shares

Associated Press

SAN DIEGO (AP) -- Qualcomm Inc. is raising its dividend by 40 percent and pledging to buy back more of its stock, as sales of the company's chips for smartphones and tablet computers improve.

The increase announced Tuesday will boost Qualcomm's quarterly dividend to 35 cents from 25 cents per share. The dividend will be paid after March 27.

It is the 11th time that Qualcomm has raised its dividend since the company introduced a quarterly stock payment of 2.5 cents per share a decade ago.

Qualcomm, based in San Diego, also plans to spend $5 billion buying back its stock, which is hovering near a 13-year high. The commitment will replace an earlier plan that earmarked $4 billion for stock purchases. Qualcomm had the authority to invest $2.5 billion in its stock under the previous plan.

The higher dividend and stock-purchase program will distribute some of the cash pouring into Qualcomm as the company benefits from the growing popularity of smartphones and tablet computers. Qualcomm chips have become a staple in many top-selling mobile devices, elevating the company's profile on Wall Street.

With market capitalization of about $116 billion, Qualcomm has surpassed Intel Corp. as the most valuable chip maker. Intel, which thrived by making chips for personal computers, has a market value of about $106 billion.

Qualcomm is doing so well that Nomura analyst Romit Shah believes the company could afford to funnel even more money into dividends and stock repurchases.

Based on Qualcomm's current stock price, the new dividend translates into a yield of about 2.1 percent. That lags the 4.2 percent dividend yield at Intel and other chip makers such as Microchip Technology Inc. (3.9 percent), Texas Instruments Inc. (3.2 percent), and Analog Devices Inc. (3 percent), Shah wrote in a Tuesday research note.

Paying the dividend will cost Qualcomm about $2.5 billion annually.

If Qualcomm buys back its stock at current prices, Shah estimates the company will have $38 billion in cash in two years, up from $28 billion at the end of 2012.

Qualcomm shares rose $1.34, or 2 percent, to close at $67.97.

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