Qualcomm Raises Their Dividend by 14%

In Friday’s CWS Market Review, I said that Qualcomm (QCOM) may soon be raising its dividend. Good timing! After the closing bell today, Qualcomm announced a 14% dividend increase plus a share buyback program of $15 billion. They plan to spend $10 billion of that within the next year. For comparison, Qualcomm currently has a market cap of $120 billion.

The quarterly dividend will rise from 42 to 48 cents per share. That’s $1.92 per share on the year which works out to a yield of 2.64% based on today’s closing price.

The company added:

”Our business continues to generate substantial operating cash flow, and today’s announcement represents an important step in returning that cash to our owners while still preserving the strategic flexibility needed to drive stockholder value through growth,” said Steve Mollenkopf, CEO of Qualcomm Incorporated. “I am pleased that we continue to build on our track record of returning capital to stockholders, having exceeded each of our capital return commitments in 2014 and returned approximately $37 billion to stockholders since these programs began in 2003.”

The shares are up 3% in the after-hours market. Qualcomm said they intend to return 75% of their free cash flow to shareholders in the form of dividends and share buybacks. Last year, they returned 93% to investors.

Curiously, Qualcomm said, “The Company plans to finance the capital return program primarily by accessing the public debt markets in 2015.” If it’s all coming out of free cash, then why do they need to tap the bond market? Qualcomm currently has more than $30 billion in cash. I assume it’s a repatriation issue, but the press release doesn’t make that clear.

Posted by on March 9th, 2015 at 6:06 pm


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