June 12, 2025 a 03:31 am
TXN: Dividend Analysis - Texas Instruments Incorporated
Texas Instruments Incorporated (TXN) stands out with a strong dividend history, maintaining robust payout consistency for over 50 years. Yet, the elevated payout ratios, especially cash flow-based, require a cautious stance. Investors should also consider the company's modest growth in dividends over recent periods, reflecting both stable and evolving dynamics within its financial framework.
📊 Overview
Texas Instruments operates within the technology sector, offering a dividend yield of 3.36%. Currently, the dividend per share stands at $5.26. With a solid 54 years of dividend history, the company displays reliable payout performance. There have been no recent cuts or suspensions, underscoring management's commitment to maintaining dividends.
| Metric | Details |
|---|---|
| Sector | Technology |
| Dividend yield | 3.36% |
| Current dividend per share | $5.26 |
| Dividend history | 54 years |
| Last cut or suspension | None |
🗣️ Dividend History
The dividend history of Texas Instruments highlights its resilience in maintaining payouts despite market volatility. Its uncompromised dividend payments over five decades reflect financial discipline and a shareholder-centric approach.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 2.72 |
| 2024 | 5.26 |
| 2023 | 5.02 |
| 2022 | 4.69 |
| 2021 | 4.21 |
📈 Dividend Growth
Evaluating the dividend growth is crucial, as it signifies future income potential for investors. Over the last 3 years, dividends have grown by 7.70%, while the 5-year growth sits moderately at 10.38%. This trend presents a consistent, albeit gradual enhancement in shareholder returns.
| Time | Growth |
|---|---|
| 3 years | 7.70% |
| 5 years | 10.38% |
The average dividend growth is 10.38% over 5 years. This shows moderate but steady dividend growth.
📊 Payout Ratio
Payout ratios provide insight into the company's ability to sustain dividends. Significantly high EPS-based payout ratio of 98.18% suggests dividends consume most of earnings. Moreover, an FCF-based payout ratio of 328.28% indicates potential sustainability concerns if cash flow pressures escalate.
| Key figure | Ratio |
|---|---|
| EPS-based | 98.18% |
| Free cash flow-based | 328.28% |
Such high payout ratios emphasize the need for careful dividend compatibility with operational performance to ensure long-term financial viability and growth.
📊 Cashflow & Capital Efficiency
Cash flow and capital efficiency metrics are vital for assessing the long-term viability of dividend payments. The Free Cash Flow Yield of 0.80% reveals constraints in asset yield conversion, paired with a relatively meager Earnings Yield of 2.68%. CAPEX consumes approximately 76.34% of operating cash flow, reflecting significant reinvestment activities for sustained growth. The company's Stock-based Compensation to Revenue is maintained at a nominal 2.47%, reinforcing disciplined compensation strategies vis-à-vis revenue.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 0.88% | 0.87% | 3.91% |
| Earnings Yield | 2.81% | 4.21% | 5.78% |
| CAPEX to Operating Cash Flow | 76.29% | 78.99% | 32.08% |
| Stock-based Compensation to Revenue | 2.47% | 2.07% | 1.44% |
| Free Cash Flow / Operating Cash Flow Ratio | 23.71% | 21.01% | 67.92% |
The significant CAPEX commitments indicate robust growth strategies. Cost efficiency reflected through the Stock-based Compensation ratio ensures capital return enhancements, albeit requiring further analysis to align dividend sustainability.
📊 Balance Sheet & Leverage Analysis
Understanding balance sheet stability and leverage is critical in assessing the company's long-term solvency and dividend safety. The Debt-to-Equity ratio across years remains reasonable, with improvements noted in 2023 and further in 2022. A healthy Current Ratio exceeding 4 suggests strong liquidity for immediate obligations, paired with a satisfactory Quick Ratio.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.80 | 0.66 | 0.60 |
| Debt-to-Assets | 0.38 | 0.35 | 0.32 |
| Debt-to-Capital | 0.45 | 0.40 | 0.37 |
| Net Debt to EBITDA | 1.38 | 0.92 | 0.51 |
| Current Ratio | 4.12 | 4.55 | 4.70 |
| Quick Ratio | 2.88 | 3.35 | 3.77 |
| Financial Leverage | 2.10 | 1.91 | 1.87 |
A weakening leverage as seen by decreasing Net Debt to EBITDA indicates prudent financial management. Strong liquidity positions complement the dividend approach, notwithstanding ongoing debt service obligations necessitating continuous earnings commitment.
📊 Fundamental Strength & Profitability
Assessing fundamental strength and profitability is key to ensuring continued dividend growth. Historically, Texas Instruments showcases robust Return on Equity figures, peaking at 60.02% in 2022, reinforcing competent asset utilization and profitability facets.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 28.39% | 38.53% | 60.02% |
| Return on Assets | 13.51% | 20.12% | 32.16% |
| Margins: Net | 30.68% | 37.16% | 43.68% |
| Margins: EBIT | 38.11% | 44.36% | 51.16% |
| Margins: EBITDA | 48.21% | 51.42% | 56.05% |
| Margins: Gross | 58.14% | 62.90% | 68.76% |
| Research & Development to Revenue | 12.52% | 10.63% | 8.34% |
Profitability metrics identify advantageous operational leverage, manifesting in sustained margin improvements. However, dividend evaluations must consider R&D investments vital for future growth to preempt market alterations.
📊 Price Development
📊 Dividend Scoring System
| Criteria | Score | Visual |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 5 | |
| Dividend growth | 3 | |
| Payout ratio | 2 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 4 |
Total Score: 30/40
📊 Rating
This analysis reveals Texas Instruments' solid dividend history and financial capacity in maintaining consistent payouts. However, the elevated payout ratios highlight potential vulnerabilities under constrained cash flow scenarios. Given the company's steady performance and growth capacity, TXN presents as a reliable dividend stock with caution advised for long-term yield acceleration considerations. A favorable "Accumulate" rating is proposed while monitoring economic shifts.