Skyworks Solutions Inc. (NASDAQ:SWKS) Offers a 4.12% Yield with a Focus on Dividend Quality

For investors looking for a dependable source of passive income, a methodical way to choose dividend stocks is important. One useful technique involves searching for companies that provide a good dividend and also have the fundamental financial soundness to maintain and possibly raise those payments. This method focuses on quality and longevity over seeking the highest yield, which can sometimes indicate trouble. A good first step is to find stocks with good scores in essential fundamental categories: a good dividend history, along with acceptable earnings and firm financial condition. This mix helps select companies that are probable to endure economic changes while still paying shareholders.

Skyworks Solutions Inc. (NASDAQ:SWKS), a top designer and maker of analog and mixed-signal semiconductors, recently appeared from such a dividend-centered search. The company’s products are key for connectivity in many areas, from smartphones and car systems to industrial and medical equipment. For investors focused on income, Skyworks shows how a technology firm can develop into a steady dividend payer.

A Strong Dividend History

The main attraction for dividend investors is Skyworks’s firm and long-standing payment to shareholders. The company’s dividend numbers are notable, especially within its sector and compared to the wider market.

• Good Yield: Skyworks now provides a dividend yield of 4.12%. This is almost twice the average yield of the S&P 500 (about 2.31%) and much higher than the average for other semiconductor companies.
• Consistent History: The company has paid dividends for at least ten years and has not cut its payment in the last five years. This record of steadiness is a main sign of management’s dedication to giving capital back to shareholders.
• Good Growth Record: Over the last five years, Skyworks has raised its dividend at an average yearly rate of 8.92%, showing it can improve shareholder returns as its business grows.

These points lead to the company’s solid ChartMill Dividend Rating of 7 out of 10. A good score in this group is necessary for the search method, as it numerically captures a stock’s attractiveness across yield, growth, and historical steadiness, all important for creating a lasting income portfolio.

Fundamental Financial Condition and Earnings

A high dividend is only as sound as the company’s capacity to keep it. This is where the search standards for acceptable earnings and financial condition become important. Skyworks’s scores in these areas give background for the longevity of its payment.

• Earnings Review: The company gets a ChartMill Profitability Rating of 5. While not outstanding, this score shows a sufficient level of earnings. Skyworks has been regularly profitable with positive cash flow over the last five years. Important earnings ratios like Return on Equity (8.29%) and Return on Invested Capital (6.28%) are good within the semiconductor field. Still, investors should be aware of a recent pattern of falling profit and operating margins, which needs watching.
• Firm Financial Base: With a ChartMill Health Rating of 6, Skyworks seems financially sound. The company keeps a very careful balance sheet, shown by a low Debt/Equity ratio of 0.09. Its Altman-Z score shows no short-term bankruptcy danger, and a good Debt to Free Cash Flow ratio of 0.93 suggests it could settle all its debts fast with its cash flow. These condition numbers are critical, as they show the company has the balance sheet soundness to support its dividend even during times of lower earnings.

Price and Growth Factors

From a price standpoint, Skyworks seems fairly valued. Its Price/Earnings ratio of 11.67 is viewed as low compared to both its industry and the wider S&P 500. This price, mixed with its yield, could present a good starting point for dividend investors mindful of value.

The main area for care is in the company’s growth path. Skyworks gets a lower Growth Rating of 3, showing limited expectations. Sales and earnings have been mostly level to slightly down lately, and analyst forecasts for the next years suggest only small growth. This slow growth profile directly affects the longevity of the dividend’s historical growth rate. The fundamental report states that while the dividend has been growing, earnings are growing more slowly, meaning the present speed of dividend raises may not be maintainable forever without improved business results.

Is Skyworks Suitable for Dividend Portfolios?

For investors using a method that mixes yield with quality, Skyworks Solutions presents a strong profile. It offers a yield much better than average supported by a ten-year record of steady and growing payments. The company’s firm balance sheet and acceptable earnings give a basic support for the dividend, matching well with a search that filters for financial condition together with dividend appeal.

However, the analysis shows why all three search standards are linked. The observed pressure on margins and the limited growth view highlight the need for continuous examination. The high dividend payout ratio of over 90% of earnings is a clear signal that future dividend growth will be closely tied to earnings improvement. Investors must balance the attractive current yield and price against these longevity questions.

A complete look at all these fundamental points is in the full ChartMill Fundamental Analysis Report for SWKS.

Skyworks was found using a structured search process centered on dividend quality, earnings, and condition. This technique can reveal many possible choices for more study. If you want to examine other stocks that fit similar standards, you can see the full search results here: Best Dividend Stocks Screen.

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Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer to buy or sell any security. The analysis uses data and scores from ChartMill, which assesses past and present fundamental data. Investors should do their own complete research and think about their personal financial position and risk comfort before making any investment choices. Past results and scores are not promises of future outcomes.