Texas Instruments Inc. (NASDAQ:TXN): A Strong Dividend Stock with High Yield and Steady Growth

When looking for reliable dividend-paying stocks, investors often use screening methods that weigh several fundamental factors. The "Best Dividend Stocks" screen on ChartMill finds companies with good dividend traits while keeping acceptable profitability and financial condition. This method helps sidestep high-yield traps where unsustainable payments can indicate deeper business issues. The screen sets minimum scores of 7 for dividend rating, 5 for profitability, and 5 for health rating, plus enough trading volume and price levels to confirm investment quality.

Dividend Strength and Sustainability

TEXAS INSTRUMENTS INC (NASDAQ:TXN) offers a strong case for dividend investors, receiving a ChartMill Dividend Rating of 7 out of 10. The company displays several features that dividend-focused investors usually look for:

• Current dividend yield of 3.35%, well above the semiconductor industry average of 2.18%
• Steady dividend growth with a 10.46% yearly rise over recent years
• Dependable payment history of at least 10 years with no cuts
• Performs better than 94.64% of industry competitors in dividend yield

Although the current payout ratio of 98.66% seems high, the company's earnings growth is greater than its dividend growth, indicating the distribution is likely maintainable. This mix of above-average yield and steady growth makes Texas Instruments especially interesting for investors wanting both current income and dividend growth possibility.

Profitability Supporting Dividend Payments

The company's good profitability, shown by its ChartMill Profitability Rating of 8, offers basic support for ongoing dividend payments. Texas Instruments keeps excellent operational efficiency:

• Return on Invested Capital of 16.57% is better than 91.07% of industry competitors
• Profit margin of 29.05% is near the top of the industry
• Operating margin of 34.82% is higher than 92.86% of semiconductor firms
• Steady positive earnings and operating cash flow for five years

These profitability numbers show the company's capacity to produce enough earnings to maintain its dividend program, answering a main worry for dividend investors about payment sustainability.

Financial Health Assessment

With a ChartMill Health Rating of 6, Texas Instruments keeps suitable financial stability even with some parts needing watch. The company's balance sheet presents mixed signs:

• Good liquidity with current ratio of 4.45 and quick ratio of 2.90
• Altman-Z score of 8.48 shows low bankruptcy danger
• Debt-to-equity ratio of 0.81 indicates average leverage
• Recent rise in shares outstanding and declining debt-to-assets ratio

While the company maintains enough liquidity for short-term needs, investors should watch the growing debt levels and share issuance, as these could affect future financial room.

Growth and Valuation Context

Texas Instruments displays encouraging growth possibilities that could aid future dividend raises. The company shows:

• Expected EPS growth of 16.92% per year
• Projected revenue growth of 10.29% annually
• Quickening growth compared to past patterns
• Current P/E ratio of 30.51, a bit higher than S&P 500 average but less expensive than 77.68% of industry competitors

The company's valuation looks fair compared to its industry, but investors should think about if the higher price is warranted by the company's good profitability and dividend features.

Complete Fundamental Analysis

For investors wanting detailed study, the complete fundamental report for Texas Instruments gives more depth into all rating parts. The report assesses the company across five key areas, growth, valuation, health, profitability, and dividend, providing a full picture of its investment qualities.

Finding Other Opportunities

Investors curious about finding similar dividend options can review the full Best Dividend Stocks screen to locate other companies matching these balanced standards for dividend investing.

Disclaimer: This analysis is based on current fundamental data and does not constitute investment advice. Investors should conduct their own research and consider their individual financial circumstances before making investment decisions. Past performance does not guarantee future results, and dividend payments may change based on company performance and board decisions.