Is Applied Materials (AMAT) the Best NASDAQ Dividend Stock to Buy?
Thursday, Jan 16, 2025 1:09 pm ET
3min read Applied Materials (AMAT) has long been a favorite among income-focused investors, thanks to its consistent dividend growth and attractive yield. As of 2025, AMAT offers a quarterly dividend of $0.40 per share, with a yield of 0.85%. This article explores whether AMAT is the best NASDAQ dividend stock to buy, considering its dividend history, payout ratio, and sustainability.
AMAT's dividend history is marked by consistent growth and stability. The company has been paying dividends since 2005, with a record of increasing dividends every year since then. This consistency reflects AMAT's strong financial performance and commitment to rewarding shareholders.
AMAT's dividend yield of 0.85% is significantly higher than the average yield of the bottom 25% of dividend payers in the US market (0.480%). This high yield indicates a substantial return on investment for shareholders. Additionally, AMAT's yield is lower than the average of the top 25% of dividend payers in the Technology sector in the US market (8.14%), suggesting that there are more attractive dividend stocks to consider within the sector.
AMAT's average payout ratio over the past 20 years is approximately 41.63%, well below the 65% threshold. This indicates that the company is maintaining a healthy balance between rewarding shareholders and retaining earnings for growth. AMAT's payout ratio is lower than many of its peers, suggesting a more conservative approach to dividend distribution.
AMAT has a moderate Dividend Sustainability Score (DSS) of 79.90%, which suggests that the company may sustain its dividends but requires continuous monitoring for any financial shifts. AMAT's Dividend Growth Potential Score (DGPS) is only moderate, with a score of 2.41%, indicating limited growth potential. While AMAT's dividend outlook remains neutral, its lower payout ratio and moderate sustainability scores suggest that the company is maintaining a balance between dividends and reinvestment.
AMAT offers a Dividend Reinvestment Plan (DRIP), allowing shareholders to automatically reinvest dividends to purchase additional shares. This feature enhances the appeal of AMAT as a long-term investment for income-focused investors.
In conclusion, AMAT's dividend history, high yield, and moderate payout ratio make it an attractive choice for income-focused investors seeking a steady income and long-term investment. However, investors should monitor the company's financial health and growth prospects to ensure the sustainability of its dividend payments. While AMAT may not be the best NASDAQ dividend stock in terms of yield, its consistent growth and stability make it a strong contender in the dividend stock landscape.
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