Leading semiconductor manufacturer Skyworks Solutions Inc. (SWKS) recently announced that its board of directors has decided to initiate a quarterly dividend payout to provide attractive risk-adjusted returns to its stockholders. The proposed dividend of 11 cents per share will be paid during the third quarter of fiscal 2014, which begins in April.
Skyworks continues to capitalize on global mobile connectivity and demand for high-performance solutions across a diverse set of vertical markets. The company supports connectivity across a number of strategic applications including medical devices, wearable technologies, home automation and hybrid vehicles as well as smartphones and tablets.
The company is confident of maintaining adequate liquidity to initiate a regular quarterly dividend. In the last reported quarter (first quarter fiscal 2014), Skyworks generated $159 million of cash from operations and had cash and equivalents of $648.6 million.
The company also repurchased approximately 670,000 shares of common stock during the reported quarter. Moving forward, Skyworks intends to return significant cash to its shareholders through dividends and share repurchases.
In order to fuel its growth engine, Skyworks aims to capitalize on three business segments − mobile Internet, vertical markets and analog components. Demand for mobile Internet applications is exploding with the broad proliferation of smartphones, net books, note books, caplets and other forms of embedded wireless devices. Skyworks also continues to consolidate its share across the mobile Internet spectrum. This covers everything from net books and data cards to smartphones, and even entry-level handsets.
The market is estimated to have 50 billion connections by 2020. Some of the fastest-growing segments include medical, industrial, automotive and smart energy where connectivity is being adopted for the very first time. Perfect quality, environmentally friendly products and sustainable business practices are key differentiators for this company in a very competitive environment. Consequently, we expect Skyworks to post solid operating results in the near future.
Skyworks currently has a Zacks Rank #1 (Strong Buy). Other stocks in the industry that look promising and are worth looking into now include Ambarella, Inc. (AMBA), FormFactor Inc. (FORM) and Himax Technologies, Inc. (HIMX), each carrying a Zacks Rank #2 (Buy).