Lam Research Corp's Dividend Analysis
Understanding the Dividend Landscape of Lam Research Corp
Lam Research Corp (NASDAQ:LRCX) recently announced a dividend of $2 per share, payable on 2024-01-03, with the ex-dividend date set for 2023-12-12. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Lam Research Corps dividend performance and assess its sustainability.
What Does Lam Research Corp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Lam Research is one of the largest semiconductor wafer fabrication equipment, or WFE, manufacturers in the world. It specializes in the market segments of deposition and etch, which entail the buildup of layers on a semiconductor and the subsequent selective removal of patterns from each layer. Lam holds the top market share in etch and holds the clear cut second share in deposition. It is more exposed to memory chipmakers for DRAM and NAND chips. It counts as top customers the largest chipmakers in the world, including TSMC, Samsung, Intel, and Micron.
A Glimpse at Lam Research Corp's Dividend History
Lam Research Corp has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Lam Research Corp's Dividend Yield and Growth
As of today, Lam Research Corp currently has a 12-month trailing dividend yield of 1.02% and a 12-month forward dividend yield of 1.14%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Lam Research Corp's annual dividend growth rate was 14.50%. Extended to a five-year horizon, this rate increased to 18.80% per year. Based on Lam Research Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Lam Research Corp stock as of today is approximately 2.41%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Lam Research Corp's dividend payout ratio is 0.24.
Lam Research Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Lam Research Corp's profitability 10 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Lam Research Corp's growth rank of 10 out of 10 suggests that the company's growth trajectory is strong relative to its competitors.
Revenue is the lifeblood of any company, and Lam Research Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Lam Research Corp's revenue has increased by approximately 24.00% per year on average, which outperforms approximately 74.91% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Lam Research Corp's earnings increased by approximately 30.40% per year on average, which outperforms approximately 54.11% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 24.90%, which outperforms approximately 61.47% of global competitors.
Next Steps
In conclusion, Lam Research Corp's forthcoming dividend, consistent dividend growth rate, prudent payout ratio, strong profitability, and robust growth metrics collectively paint a picture of a company with a solid financial foundation and a promising outlook for dividend sustainability. Investors seeking to capitalize on steady income streams may find Lam Research Corp an attractive option, given its performance and strategic market position. Will Lam Research Corp continue to uphold its dividend reputation in the years to come? This is a question value investors may consider as they evaluate the company's potential for long-term wealth generation.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
