An In-depth Analysis of the Company's Dividend Performance and Sustainability
Taiwan Semiconductor Manufacturing Co Ltd (TSM, Financial) recently announced a dividend of $0.47 per share, payable on 2023-10-12, with the ex-dividend date set for 2023-09-14. 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 deep dive into Taiwan Semiconductor Manufacturing Co Ltd's dividend performance and assess its sustainability.
Company Overview
Taiwan Semiconductor Manufacturing Co. is the world's largest dedicated chip foundry, with almost 60% market share. TSMC was founded in 1987 as a joint venture of Philips, the government of Taiwan, and private investors. It went public as an ADR in the U.S. in 1997. TSMC's scale and high-quality technology allow the firm to generate solid operating margins, even in the highly competitive foundry business. Furthermore, the shift to the fabless business model has created tailwinds for TSMC. The foundry leader has an illustrious customer base, including Apple, AMD, and Nvidia, that looks to apply cutting-edge process technologies to its semiconductor designs. TSMC employs more than 73,000 people.
A Glimpse at Taiwan Semiconductor Manufacturing Co Ltd's Dividend History
Taiwan Semiconductor Manufacturing Co Ltd has maintained a consistent dividend payment record since 2016. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Taiwan Semiconductor Manufacturing Co Ltd's Dividend Yield and Growth
As of today, Taiwan Semiconductor Manufacturing Co Ltd currently has a 12-month trailing dividend yield of 1.94% and a 12-month forward dividend yield of 2.00%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Taiwan Semiconductor Manufacturing Co Ltd's annual dividend growth rate was -4.20%. Extended to a five-year horizon, this rate increased to 8.50% per year. And over the past decade, Taiwan Semiconductor Manufacturing Co Ltd's annual dividends per share growth rate stands at an impressive 17.20%.
Based on Taiwan Semiconductor Manufacturing Co Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Taiwan Semiconductor Manufacturing Co Ltd stock as of today is approximately 2.92%.
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 2023-06-30, Taiwan Semiconductor Manufacturing Co Ltd's dividend payout ratio is 0.30.
Taiwan Semiconductor Manufacturing Co Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Taiwan Semiconductor Manufacturing Co Ltd's profitability 10 out of 10 as of 2023-06-30, 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. Taiwan Semiconductor Manufacturing Co Ltd's growth rank of 10 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Taiwan Semiconductor Manufacturing Co Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Taiwan Semiconductor Manufacturing Co Ltd's revenue has increased by approximately 28.40% per year on average, a rate that outperforms than approximately 82.51% 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, Taiwan Semiconductor Manufacturing Co Ltd's earnings increased by approximately 41.00% per year on average, a rate that outperforms than approximately 65.33% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 22.60%, outperforms than approximately 58.04% of global competitors.
Concluding Thoughts
Overall, Taiwan Semiconductor Manufacturing Co Ltd's consistent dividend payments, impressive dividend growth rate, sustainable payout ratio, high profitability, and robust growth metrics indicate a promising outlook for dividend investors. As the company continues to outperform its global competitors in various aspects, it may provide a stable and growing income stream for shareholders in the foreseeable future. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
