This semiconductor company is seeing new interest from investors who are plowing their funds into call options on its shares, ahead of next week’s earnings report. And JMP Securities recently raised its price target on the shares to $46.
Skyworks Solutions (SWKS)
from DRIP Investor
Skyworks Solutions (SWKS) makes analog semiconductors and recently upped its appeal with investors by announcing that it is initiating a dividend. The firm will begin paying a quarterly dividend of $0.11 cents per share during the third quarter of fiscal 2014, which begins in April. The dividend gives these shares a current yield of 1.2%.
The company is expected to earn at least $2.60 per share in fiscal 2014 ending in September. Based on those earnings, the payout ratio—the percentage of profits paid out in dividends—is just 17%.
Thus, Skyworks has ample flexibility to boost the dividend, especially as profits increase. While the company’s main markets include tablets and smart phones, Skyworks is an integral player in the growth of the “Internet of things.” Indeed, the growing connectivity of virtually everything—not just computers and tablets and smart phones, but autos, machines, thermostats, even clothing—is a boon to the company and its products.
Despite the stock’s impressive price action, these shares still trade at a reasonable 14 times fiscal 2014 earnings estimate. The stock, which scores a 99 out of a possible 100 in our Quadrix stock rating system, is a buy.
Skyworks Solutions direct-purchase plan has a minimum initial investment of $1,000. Subsequent investments are a minimum $25. Purchasing costs are $2.50 plus $0.10 per share. Selling fees are $15 plus $0.10 per share. The plan administrator is American Stock Transfer and Trust. For enrollment information call (877) 366-6437 or visit Amstock online at www.amstock.com.
Charles A. Carlson, CFA, DRIP Investor, www.dripinvestor.com, 800-233-5922, April 2014