Last update on 2024-06-27

NXP Semiconductors (NXPI) - Dividend Analysis (Final Score: 5/8)

Analyze the 2023 dividend performance of NXP Semiconductors (NXPI) with a final score of 5/8 using an 8-criteria system.

Short Analysis - Dividend Score: 5

We're running NXP Semiconductors (NXPI) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The analysis looked at NXP Semiconductors' (NXPI) dividend policy using 8 different criteria. They scored a 5 out of 8, which means they have some strengths and weaknesses. Let's quickly break down each point: - **Dividend Yield**: NXPI has a yield of 1.7659%, which is better than the industry average of 0.65%. This shows it's a good income generator. - **Average Annual Growth Rate**: No specific data provided. - **Payout Ratio**: Slightly above the ideal 65% at 66.327%. It was unstable in past years but has improved recently. - **Dividends Covered by Earnings**: Demonstrates sustainability and less volatility. - **Dividends Covered by Cash Flow**: Shows the company generates enough cash to support future dividends. - **Stable Dividends**: Not stable over the past 20 years; only started paying in 2018. - **Paid Dividends for Over 25 Years**: No, they only started in 2018. - **Stock Repurchases**: This wasn't evaluated in detail. From this, it's clear NXPI has a good yield and improving payout ratios but lacks long-term dividend payment history.

Insights for Value Investors Seeking Stable Income

Based on the analysis, NXP Semiconductors shows good potential for income investors due to its higher-than-average dividend yield and improving payout ratios. However, it's relatively new to paying dividends, so if you prefer companies with a long history of stable and consistent dividends, you might want to look elsewhere. But if you're okay with the recent positive trend, NXPI could be worth considering.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Explain the criterion for NXP Semiconductors (NXPI) and why it is important to consider

Dividend yield is a critical metric for income-focused investors as it represents the annual dividend income as a percentage of the stock price. A high yield may indicate a good income-generating investment. NXP Semiconductors (NXPI) boasts a dividend yield of 1.7659%, significantly higher than the industry average of 0.65%. Historically, NXPI only began paying dividends in 2018 and has seen a consistent upward trend, culminating in a yield of 2.1388% in 2022 before slightly decreasing in 2023. The industry average has fluctuated but remains relatively low. This higher yield positions NXPI favorably for those seeking regular income, especially considering the robust increase in dividends per share from $0.5 in 2018 to $4.056 in 2023 and a climbing stock price. Despite the marginal dip from 2022, NXPI’s yield remains superior to the industry average, suggesting a strong commitment to returning value to shareholders and making it an attractive option in a typically lower-yielding sector.

Average annual Growth Rate higher than 5% in the last 20 years?

Explain the criterion for NXP Semiconductors (NXPI) and why it is important to consider

The Dividend Growth Rate is a measure of how much a company's dividend payments have increased over time. It's important for investors looking for income growth and to assess the sustainability of dividend payments.

Average annual Payout Ratio lower than 65% in the last 20 years?

Explain the criterion for NXP Semiconductors (NXPI) and why it is important to consider

The Payout Ratio is a critical measure that indicates the percentage of earnings a company is dedicating to pay dividends to its shareholders. For NXP Semiconductors (NXPI), the payout ratio data over the years shows an average that slightly exceeds the 65% threshold, resting at 66.327%. Crucially, the trend becomes interesting when we analyze the period from 2018 onwards. In 2018, the payout ratio was just 7.4413%, followed by an unexpected surge in 2019 to 145.0958%, and a dramatic rise in 2020 reaching an unsustainable 806.8854%. However, from 2021 onwards, the company managed to bring it back down significantly to below 65%. To conclude, while the trend has overall improved in recent years, the historical average failing to meet the sub-65% criterion may elicit both cautious and promising signals depending on the greater financial context.

Dividends Well Covered by Earnings?

Explain the criterion for NXP Semiconductors (NXPI) and why it is important to consider

Earnings per share (EPS) indicate the company's profitability and its ability to generate net income attributed to each individual share of its stock. Dividends per share demonstrate the portion of profit distributed to shareholders. Whether dividends are well covered by earnings is assessed by comparing the EPS and dividends paid. If EPS is consistently higher than dividends, it indicates a healthy trend suggesting sustainability and less volatility in payouts, crucial for investor's confidence, particularly for income-focused investors.

Dividends Well Covered by Cash Flow?

explain the criterion for NXP Semiconductors (NXPI) and why it is important to consider

Dividends well covered by cash flow mean that the company generates enough cash from operations to cover its dividend payments. This criterion is crucial for assessing how safely a company can continue its dividend payments in the future. High free cash flow indicates that a company has sufficient liquidity to not only sustain but potentially increase its dividend payouts over time.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over the past 20 years are critical for income-seeking investors, as they seek reliable and predictable income streams. A stable dividend indicates the company's resilience and consistent financial performance over time.

NXP Semiconductors (NXPI) has not been able to provide stable dividends over the past 20 years. From 2008 to 2017, there were no dividends paid at all, and the dividend payments only started in 2018. Since then, while there has been a general uptrend in dividend per share, this sporadic dividend history over the two decades illustrates that NXPI is not yet a reliable dividend payer. For instance, there was no year in that period where dividends dropped by more than 20%, but this is primarily because the dividends started only in the last few years. Hence, income-seeking investors should be cautious.

Dividends Paid for Over 25 Years?

Explain the criterion for NXP Semiconductors (NXPI) and why it is important to consider

NXP Semiconductors (NXPI) has not paid dividends for over 25 years. According to the given data, the company commenced paying dividends in 2018. In the financial years from 2018 to 2023, there was a steady increase in the dividend per share from $0.5 to $4.056, indicating a strong commitment towards shareholder returns once initiated. However, as the company has only a history of 6 years of paying dividends, it does not meet the criterion of paying dividends for over 25 years. Consequently, while the trend in recent years is favorable and positive for shareholders, it lacks the longevity to fully meet this highly conservative criterion which demands long-term consistency and reliability.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for NXP Semiconductors (NXPI) and why it is important to consider

Stock repurchases are corporate actions where a company buys back its shares from the marketplace, reducing the number of outstanding shares. This action can signal that the company believes its shares are undervalued, and it typically benefits shareholders by possibly increasing the stock price and earnings per share.