Yahoo Finance Income Investors Should Know That QUALCOMM Incorporated (NASDAQ:QCOM) Goes Ex-Dividend Soon
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that QUALCOMM Incorporated (NASDAQ:QCOM) is about to go ex-dividend in just 4 days. This means that investors who purchase shares on or after the 2nd of December will not receive the dividend, which will be paid on the 17th of December.
QUALCOMM's next dividend payment will be US$0.65 per share. Last year, in total, the company distributed US$2.60 to shareholders. Calculating the last year's worth of payments shows that QUALCOMM has a trailing yield of 1.8% on the current share price of $144.08. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether QUALCOMM has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for QUALCOMM
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. QUALCOMM is paying out an acceptable 55% of its profit, a common payout level among most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out more than half (65%) of its free cash flow in the past year, which is within an average range for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see QUALCOMM earnings per share are up 7.0% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, QUALCOMM has lifted its dividend by approximately 14% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
The Bottom Line
Has QUALCOMM got what it takes to maintain its dividend payments? Earnings per share have been growing modestly and QUALCOMM paid out a bit over half of its earnings and free cash flow last year. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.
However if you're still interested in QUALCOMM as a potential investment, you should definitely consider some of the risks involved with QUALCOMM. Case in point: We've spotted 2 warning signs for QUALCOMM you should be aware of.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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