Texas Instruments Inc (NASDAQ:TXN): A Reliable Dividend Stock with Strong Growth and Financial Stability

When assessing dividend stocks, investors typically seek firms that provide appealing yields along with stable payout ratios, steady growth, and solid financial performance. The "Best Dividend Stocks" screen on ChartMill selects securities with a high ChartMill Dividend Rating (≥7), confirming they meet strict dividend sustainability standards, while also demanding a minimum Profitability Rating (≥5) and Health Rating (≥5) to verify operational efficiency and financial soundness. This method helps sidestep high-yield traps—firms with unmaintainable payouts due to weakening fundamentals—and instead highlights dependable income sources.

One stock that fits these standards is Texas Instruments Inc (NASDAQ:TXN). The firm’s Dividend Rating of 7 highlights its balanced mix of yield, growth, and payout stability, while its Profitability Rating of 8 and Health Rating of 6 reinforce its capacity to sustain dividends even in tough environments.

Key Dividend Advantages of Texas Instruments

• Competitive Yield Within the Industry:
  TXN’s 2.92% dividend yield is moderate but exceeds 93.6% of its semiconductor sector competitors, which average 2.21%. It also slightly outperforms the S&P 500’s average yield of 2.36%, making it a strong option for income-focused investors.

• Steady Dividend Growth:
  The firm has raised its dividend at an annual rate of 10.46% over the last five years, showing a dedication to shareholder returns. Notably, TXN has maintained its dividend without reductions for at least ten years, aligning with the "Dividend Aristocrat" principle of consistent payouts.

• High Profitability Backs Dividends:
  Despite a payout ratio of 97.7% (a possible concern), TXN’s strong profitability metrics ease worries. Its Return on Equity (30.6%) and Operating Margin (34.9%) rank among the top in the semiconductor sector, ensuring sufficient earnings to support dividends. The firm’s projected earnings growth (17.4% yearly) also outpaces its dividend growth, indicating potential for future hikes.

• Solid Financial Position Ensures Stability:
  While TXN’s Debt-to-Equity ratio (0.86) is above 82.7% of industry peers, its liquidity metrics stand out: a Current Ratio of 5.8 and Quick Ratio of 3.9 show no immediate solvency risks. The Altman-Z score of 9.0 further confirms minimal bankruptcy risk.

Why These Factors Are Important

The screening process focuses on dividend sustainability, which TXN achieves through its strong profitability and controlled growth. The high payout ratio is balanced by top-tier margins and projected earnings growth, while its liquidity ensures dividend reliability even in downturns. For dividend-focused investors, these elements lower the chance of payout cuts—a key factor for long-term income plans.

For a closer look at TXN’s fundamentals, examine its complete Fundamental Analysis Report.

Discover Additional Dividend Options

The "Best Dividend Stocks" screen highlights other high-quality dividend payers besides TXN. See the full screen results here to compare metrics like yield, growth, and financial health across other candidates.

Disclaimer: This analysis is not investment advice. Always perform your own research or consult a financial advisor before making investment decisions.