Avago Technologies Limited (AVGO), a leading semiconductor manufacturer, recently announced an 11.8% year-over-year hike in its dividend payout to a quarterly payment of 19 cents per share or 76 cents on an annualized basis. The second quarter fiscal 2013 dividend is payable in cash on Apr 4 to shareholders of record as of Mar 25.
Based on the closing price of $36.00 on Mar 15, 2013, the proposed dividend affirms a yield of 2.1%. A steady dividend payout is part of the long-term strategy of Avago to provide attractive risk-adjusted returns to its stockholders. In addition, decent dividend increases at periodic intervals have been one of the company’s most attractive features.
Avago had earlier raised the quarterly dividend payout from 16 cents to 17 cents per share or from 64 cents to 68 cents on an annualized basis in Dec 2012. Prior to that, Avago raised its quarterly dividend three times in 2012 – in September (from 15 cents to 16 cents per share), in June (from 13 cents to 15 cents), and in March (from 12 cents to 13 cents).
The company also has a share repurchase program in place, under which it repurchased shares worth $132 million in first quarter fiscal 2013. Over the years, Avago has consistently returned significant cash to its shareholders through dividends and share repurchases.
With an expertise in compound semiconductor design and processing, Avago is a premier designer, developer and global supplier of a broad range of analog, mixed signal and optoelectronics components and subsystems. The company boasts over 4,200 patents serving three primary target market segments: wireless communications, wired infrastructure, and industrial and other.
Avago faces stiff competition from other players in the market such as Cabot Microelectronics Corporation (CCMP), Rambus Inc. (RMBS) and PLX Technology Inc. (PLXT) , each carrying Zacks Rank #1 (Strong Buy). However, Avago presently has a Zacks Rank #3 (Hold).
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