Why Skyworks Solutions’ Dividend Yield Has Changed Direction
Skyworks’ revenue and earnings in 2015 and 2016
Skyworks Solutions’ (SWKS) revenue rose 42% and 1% in 2015 and 2016, respectively. Its revenue from the Americas rose in 2015 before falling in 2016, and its Asia-Pacific revenue rose in both years. Meanwhile, revenue from Taiwan and South Korea fell in 2016 after growth in 2015. EMEA (Europe, the Middle East, and Africa) revenue was nearly flat in 2016 after rising in 2015.
The company’s operating expenses rose 16% and 3% in 2015 and 2016, respectively, while its operating income rose 81% in 2015 and 9% in 2016. These developments translated into 72% and 26% EPS (earnings per share) growth in 2015 and 2016, respectively. In 2016, EPS were further enhanced by share buybacks and offset by a merger termination fee.
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Skyworks’ revenue and earnings in the first nine months of 2017
In the first nine months of 2017, Skyworks’ revenue rose 9%. Its operating expenses rose 5%, its operating income rose 10%, and its EPS rose 1%, enhanced by share buybacks. The company has maintained a good free cash flow balance.
Skyworks’ dividend yield
In 2016, the company saw 63% dividend-per-share growth, followed by 9% growth in 2017. Its stock price has risen 51.6% this year, thanks to the recent tech rally. It fell 3% in 2016. The stock’s price gains and lower dividend growth have contributed towards the stock’s dividend yield curve sloping downward. The sector could continue to enjoy a high valuation considering the present outlook for the wireless broadband technology and smartphone industries.
Skyworks versus broad indexes
Skyworks Solutions has a PE (price-to-earnings) ratio of 21.9x and dividend yield of 1.1%, whereas the sector’s average PE ratio is 42.6x, and its dividend yield is 0.8%. The S&P 500 (SPX-INDEX) (SPY) offers a dividend yield of 2.3%, PE ratio of 22.6x, and YTD return of 15.6%. The Dow Jones Industrial Average (DJIA) (DIA) has a dividend yield of 2.3%, PE ratio of 21.1x, and YTD return of 19.1%. The NASDAQ (COMP-INDEX) (ONEQ) has a PE ratio of 25.3x and YTD return of 25.7%.
The First Trust NASDAQ Technology Dividend Index ETF (TDIV), a dividend fund, has exposure to Skyworks Solutions. It has a 2.2% dividend yield and a PE ratio of 18x. Meanwhile, the Schwab US Dividend Equity ETF (SCHD) has 23% exposure to technology, a 3% dividend yield, and a PE ratio of 20.3x.