Yahoo Finance Read This Before Buying Lam Research Corporation (NASDAQ:LRCX) For Its Upcoming $1.1 Dividend
Shares of Lam Research Corporation (NASDAQ:LRCX) will begin trading ex-dividend in 3 days. To qualify for the dividend check of $1.1 per share, investors must have owned the shares prior to 05 June 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Lam Research’s latest financial data to analyse its dividend attributes. View our latest analysis for Lam Research
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it the top 25% annual dividend yield payer?
Has it paid dividend every year without dramatically reducing payout in the past?
Has the amount of dividend per share grown over the past?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Lam Research fare?
The current trailing twelve-month payout ratio for the stock is 16.32%, which means that the dividend is covered by earnings. Going forward, analysts expect LRCX’s payout to increase to 19.57% of its earnings, which leads to a dividend yield of 1.68%. In addition to this, EPS should increase to $15.38. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Unfortunately, it is really too early to view Lam Research as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Lam Research has a yield of 2.18%, which is high for Semiconductor stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about Lam Research from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three pertinent aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for LRCX’s future growth? Take a look at our free research report of analyst consensus for LRCX’s outlook.
Valuation: What is LRCX worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether LRCX is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
