Lam Research’s (LRCX, Financial) dividend was increased by a solid 50% last week. Its overall yield is 1.76%. The company started paying a dividend in 2014.
Lam is primarily focused on the etch semiconductor market, which is a key element in fabricating semiconductors. It designs and manufactures utilized production of semiconductors. Its major products include Vector and Kiyo. The company is global in nature and sells it products to major technology companies like Taiwan Semiconductor (TSM, Financial) and Samsung (SSNLF, Financial). Lam Research was founded in 1980 and is headquartered in Fremont, California.
Lam Research has maintained an incredible two-year growth rate of dividends of 205%. Lam Research currently ranks third in yield within the large-cap technology, semiconductor equipment and materials category. The quarterly dividend for the January payment will be 45 cents versus the prior year rate of 30 cents per share.
The dividend will be paid at the new higher rate on Jan. 4, 2017, to shareholders of record at close of business on Dec. 14. Lam Research is currently priced at $102.40. Listed in the table below are the quarterly dividend payments since 2014.
| Date | Quarterly Dividend |
| Dec. 14 | 45 cents |
| Sept. 12 | 30 cents |
| June 6 | 30 cents |
| March 7 | 30 cents |
| Dec. 7, 2015 | 30 cents |
| Sept. 4, 2015 | 30 cents |
| June 8, 2015 | 30 cents |
| March 9, 2015 | 18 cents |
| Dec. 8, 2014 | 18 cents |
| Sept. 8, 2014 | 18 cents |
| June 9, 2014 | 18 cents |
Quantitative analysis
We examine Lam Research upon our five key criteria, which include:
| Category | Value | Score |
| Dividend Yield | 1.76% | 316 |
| Dividend Growth (2-year avg) | 205% | NA |
| Forward P/E | 11.1 | 66 |
| S&P Financial Rating | BBB | 160 |
| Beta | 1.15 | 175 |
| Total Score | Ă‚ | NA |
Additional quantitative information on P/S ratio and historical yield:
| % Yield | 2-Year Div. Growth Rate | 6-Year Div. Growth Rate | SPS 2016 | P/S Ratio | 10-yr P/S Low | 10-yr P/S High | 5-yr lowest Yield % | 5-yr max Yield % |
| 1.76% | 205% | NA | 36.74 | 2.68 | 1.44 | 4.28 | 0.00% | 1.82% |
Positives
- Lam Research maintains an investment grade credit rating and a current dividend yield (1.76%) its five-year maximum.
- Lam Research has maintained a growth rate of dividends of 205% since it started paying dividends in July 2014.
- Lam Research is trading below its ten-year average price-sales (P/S) ratio.
Negatives
- Lam Research’s dividend yield is below that of the S&P 500 Index.
- Lam Research maintains a beta of 1.15, higher than the average company.
Latest earnings & overall analysis
Lam Research issued its earnings data on Oct. 19. The company reported $1.81 EPS for the quarter, topping the consensus estimate of $1.78 by three cents. The company had revenue of $1.63 billion in the fourth quarter. This was in line with expectations. Lam Research's revenue climbed just over 2.0% over last year’s results. Lam Research maintains a solid return on equity of 18.59%.
It recently had a setback with its failed merger with KLA-Tencor (FRA:KLA, Financial). But the firm continues to have excellent prospects. This includes advanced logic and increasing demand for 3-D Nandy products. As the leading firm in the etch market, Lam Research is well insulated from the competition. The company has also made several smart acquisitions to gain depth of product including SEZ and the merger with Novellus, which held a top market share position in depositions. Lam does face competition from two large competitors, but has a strong record of development with a strong commitment to research and development.
Lam hosted an analyst day on Nov. 18. Management was very upbeat on the prospects for 2017. The company indicated that next quarter shipments were to be up more than 20%, higher than consensus expectations. The company also announced a large $1 billion stock buyback targeting earnings per share of $11. The company currently trades at $106 a share. Based upon expectations for 2017 earnings per share of $9.50, the firm trades at a mere 11 times earnings. It price-sales ratio is also low based upon historical standards. However, the price of the stock was $64 earlier this year, so the stock has moved by a large margin the past six months. We would wait for a better entry point on price. Based on the compnay’s recent stock strength, lower than average dividend yield and high beta, Lam Research does not qualify as a member of our Top 100 Dividend Stocks.
Disclosure: I have no position in Lam Research.
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