With the increasing application of semiconductor chips in the digital era—driven by the Internet of Things (IoT), Artificial Intelligence (AI), 5G network, and cloud computing—analysts expect the global semiconductor shortage to continue this year. However, according to the Semiconductor Industry Association (SIA), global semiconductor industry sales in 2021 reached a record $555.9 billion, up 26.2% year-over-year.
While current geopolitical tension could deepen supply chain disruptions, the industry is poised to witness tremendous growth in the coming months, fueled by surging demand from several industries that are incorporating advanced technologies to make their business processes smart. In addition, as the market continues to witness heightened volatility, high dividend-paying stocks in the semiconductor industry could be ideal bets to ensure a steady portfolio income stream.
Therefore, we think it could be wise to invest in fundamentally sound semiconductor stocks Intel Corporation (INTC), ASE Technology Holding Co., Ltd. (ASX), and ChipMOS TECHNOLOGIES INC. (IMOS), which offer dividend yields of more than 3%. These stocks are rated Strong Buy or Buy in our proprietary ratings system.
Click here to checkout our Semiconductor Industry Report for 2022
Intel Corporation (INTC)
INTC in Santa Clara, Calif., designs, manufactures, and sells computer products and technologies internationally and operates through CCG; DCG; IOTG; Mobileye; NSG; PSG; and All Other segments. It provides platform products, such as central processing units and chipsets and non-platform or adjacent products, including accelerators, boards and systems, connectivity products, graphics, and memory and storage products.
INTC declared a $0.37 quarterly dividend on Jan. 26, 2022, that was payable on March 1, 2022. Its $1.46 annual dividend yields 3.1% at its current share price. In addition, the company's dividend payouts have increased at a 6.2% CAGR over the past five years.
Last month, INTC and Tower Semiconductor Ltd. (TSEM), a leading foundry for analog semiconductor solutions, agreed to Inte’s acquisition of Tower for $53 per share in cash, representing a total enterprise value of approximately $5.4 billion. The acquisition will facilitate Intel's IDM 2.0 strategy since the company is further expanding its manufacturing capacity, global footprint, and technology portfolio to address the unusual industry demand.
Also last month, Intel Foundry Services (IFS) launched Accelerator, a comprehensive ecosystem alliance developed to assist foundry customers in helping bring their silicon products from idea to execution smoothly. Since IFS Accelerator is in an intense collaboration with a group of industry-leading companies across electronic design automation (EDA), intellectual property (IP), and design services, it has the best capabilities available in the industry to help improve customer innovation on Intel's foundry manufacturing platform.
In the fourth quarter, ended Dec. 25, 2021, INTC’s non-GAAP net revenue increased 3.5% year-over-year to $19.53 billion. Its non-GAAP operating income amounted to $5.05 billion, while its net income came in at $4.45 billion. The company's non-GAAP EPS amounted to $1.09.
The $3.20 consensus EPS estimate for fiscal 2023 represents 6.7% year-over-year growth. Analysts expect its revenue to increase 1.2% year-over-year to $75.64 billion in its fiscal year 2022. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
INTC's POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock also has an A grade for Value and a B for Quality and Sentiment. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #11 of 97 stocks.
To see additional POWR Ratings for Growth, Stability, and Momentum for INTC, click here.
ASE Technology Holding Co., Ltd. (ASX)
Headquartered in Kaohsiung, Taiwan, ASX provides a range of semiconductor packaging and testing and electronic manufacturing services worldwide. It offers packaging services, including flip-chip ball grid array (BGA), flip chip-scale package (CSP), advanced-scale packages, quad flat packages, low profile, thin quad flat packages, bump chip carriers, and other related services.
ASX's $0.30 annual dividend yields 4.5% at its current share price. ASX paid a $0.30 yearly dividend on Oct. 7, 2021.
ASX's net revenue increased 16.2% year-over-year to NT$172.94 billion ($6.11 billion) for the fourth quarter, ending Dec. 31, 2021. Its operating income increased 74.4% from its year-ago value to NT$19.62 billion ($693.71 million), while its net income grew 207.8% to NT$30.92 billion ($1.09 billion). And its EPS increased 118.4% year-over-year to NT$6.99.
The $0.20 consensus EPS estimate for the first quarter, ended March 31, 2022, represents 43.9% year-over-year growth. Analysts expect its revenue to increase 21.4% year-over-year to $5.09 billion for the first quarter, ending March 32, 2022.
ASX's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary ratings system. ASX is also rated an A for Value and B for Sentiment and Momentum. Within the Semiconductor & Wireless Chip industry, it is ranked #35.
In total, we rate ASX on eight diverse levels. To see additional POWR Ratings for Growth, Quality, and Stability for ASX, click here.
ChipMOS TECHNOLOGIES INC. (IMOS)
Headquartered in Hsinchu, Taiwan, IMOS researches, develops, manufactures, and sells high-integration and high-precision integrated circuits and related assembly and testing services internationally. It operates through Testing; Assembly; Testing and Assembly for LCD, OLED, and other Display Panel Driver Semiconductors; Bumping; and Other segments.
IMOS paid an annual dividend of $1.58 on Sept. 8, 2021. Its $1.58 annual dividend yields 4.6% on its current share price. In addition, the company has a two-year record of consecutive annual dividend growth.
During its fiscal year, which ended on Dec. 31, 2021, IMOS' revenue increased 19.1% year-over-year to NT$27.40 million ($0.97 million). Its operating profit grew 56% year-over-year to NT$5.56million ($0.20 million), while its net profit increased 113.7% year-over-year to NT$5.06 million ($0.18 billion). The company's EPS rose 112.1% from the prior-year period to NT$6.81.
Analysts expect IMOS revenue to increase 3.4% year-over-year to $238.96 million for the first quarter, ending March 31, 2022. The stock has gained 29.2% in price over the past year and 5.1% over the past month.
It is no surprise that IMOS has an overall B rating, which equates to Buy in our POWR Ratings system. IMOS has a B grade for Value, Momentum, and Stability. In the Semiconductor & Wireless Chip Industry, it is ranked #16.
Click here to see the additional POWR Ratings for IMOS (Growth, Sentiment, and Quality).
Click here to checkout our Semiconductor Industry Report for 2022
INTC shares were trading at $47.56 per share on Tuesday afternoon, down $0.12 (-0.25%). Year-to-date, INTC has declined -6.95%, versus a -11.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
3 Top Rated Semiconductor Stocks with Dividend Yields More Than 3% StockNews.com
