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Avago Ups Interim Dividend by 9.5%

Zacks Equity Research

Avago Technologies Limited (AVGO), a leading semiconductor manufacturer, recently announced a 9.5% year-over-year hike in its dividend payout to a quarterly payment of 23 cents per share or 92 cents on an annualized basis. The third quarter fiscal 2013 dividend is payable in cash on Sep 30 to shareholders of record as of Sep 19.

Based on the closing price of $38.56 on Sep 6, 2013, the proposed dividend offers a yield of 2.38%. 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.

The current dividend increase is the third of its kind in 2013. Avago had earlier raised the quarterly dividend payout from 19 cents to 21 cents in June and from 17 cents to 19 cents in March. 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 $24 million in the first two quarters of 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 presently has a Zacks Rank #3 (Hold). Other players in the market worth mentioning include Diodes Incorporated (DIOD), Advanced Micro Devices, Inc. (AMD) and PLX Technology Inc. (PLXT), each carrying Zacks Rank #1 (Strong Buy).

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