Unveiling the Dividend Profile of a Semiconductor Giant
Taiwan Semiconductor Manufacturing Co Ltd (TSM, Financial) recently announced a dividend of $0.47 per share, payable on 2024-01-11, with the ex-dividend date set for 2023-12-14. 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 look into Taiwan Semiconductor Manufacturing Co Ltd's dividend performance and assess its sustainability.
What Does Taiwan Semiconductor Manufacturing Co Ltd Do?
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 1.78% and a 12-month forward dividend yield of 1.81%. 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 2.68%.
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 2023-09-30, Taiwan Semiconductor Manufacturing Co Ltd's dividend payout ratio is 0.33.
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 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each 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 approximately 81.87% 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 40.90% per year on average, a rate that outperforms approximately 66.01% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 22.40%, which outperforms approximately 58.44% of global competitors.
Concluding Insights on Dividend Sustainability
Considering Taiwan Semiconductor Manufacturing Co Ltd's dividend payments, growth rate, payout ratio, profitability, and growth metrics, the company stands as a compelling case for investors seeking stable dividend income with potential for growth. The robust financial health indicated by the payout ratio, combined with a strong profitability rank and positive growth metrics, suggests that Taiwan Semiconductor Manufacturing Co Ltd is well-positioned to continue its history of dividend payments. Investors should weigh these factors as they consider the role of Taiwan Semiconductor Manufacturing Co Ltd in their portfolios. For those interested in further exploring dividend opportunities, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
