Those of you who have read my previous articles probably know that I’m a big fan of dividends. Dividends can play an important role in your portfolio, no matter your stage of life. I am at the beginning of my investing life with a long time to go until retirement, but I love dividends; a retiree will love dividends too as they provide the necessary income. Finding a good mix of potential growth and dividends is a tough task, but it’s one that I think the semiconductor industry helps us solve.
World’s Largest
You had to figure that the world’s largest microprocessor manufacturer would be in here. Intel Corporation (NASDAQ:INTC) has had many years of excellent growth and is currently the firm to beat in the microprocessor space. With a current dividend yield of 4.37% and a P/E of 9.66 I don’t see any reason to pass up this juggernaut of the semiconductor space. Over the next few years Intel Corporation (NASDAQ:INTC) is expected to gain around 5% a year in terms of EPS; the stock also has a one-year target price of around $23.50, depending on the analyst that you have. At today’s levels, $23.50 would represent a very reasonable gain, especially when you throw in the 4.37% yield.
Europe’s Largest
In the spirit of sticking with the larger companies out there, I managed to find STMicroelectronics N.V. (ADR) (NYSE:STM). This company is based out of Switzerland and supplies the components that you’ll see in Nokia cell phones. The dividend at STM is currently yielding 4.4%, and that’s on a P/E ratio of 10.68. As this company has been experiencing some losses as of late due to a failing wireless segment, you should see some resurgence through 2014/2015, around the time that STMicroelectronics N.V. (ADR) (NYSE:STM) will drop their wireless division.
Largest Yield
United Microelectronics Corp (ADR) (NYSE:UMC) isn’t the largest in their respective category, but they do have the largest dividend yield out of the bunch. The company operates through wafer production and distributes its products around the world. The company is currently trading at 17 times earnings, but it brings with it a monstrous 4.59% yield. Some things I like about UMC include the fact that it is pretty small with a $4.5 billion market cap and that it could take off if more institutions pick up on it, as it only has 8% institutional holding.
Overall
Intel and STM both have five star CAPS picks while UMC has four stars. All three companies are highly regarded by analysts, for the most part.
After the down trending we have been seeing in the markets as of late due to things like the Italian election, I’d like to think that now is a good time to get in on any of these three companies. My recommendation is a long position for the long term. Hold these companies, reap the dividends and watch your portfolio grow from the growth of these semiconductor companies.
The article Three Semiconductors That Pay Big Dividends originally appeared on Fool.com and is written by Ash Anderson.
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