Qualcomm Stock Rises After Earnings Beat, Dividend News

Qualcomm (QCOM) stock is up more than 10% in Thursday's session after the technology giant beat top- and bottom-line expectations for its fiscal second quarter and reiterated its dividend increase.

In the three months ended March 31, Qualcomm's revenue increased 1.3% from the year-ago period to $9.4 billion. Its earnings per share (EPS) were up 13.5% to $2.44.

"We are pleased to report strong quarterly results, with EPS exceeding the high end of our guidance," Qualcomm CEO Cristiano Amon said in a statement. "We are excited about our continued growth and diversification, including achieving our third consecutive quarter of record QCT Automotive revenues, upcoming launches with our Snapdragon X platforms, and enabling leading on-device AI [artificial intelligence] capabilities across multiple product categories."

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The quarterly results handily beat analysts' expectations. According to CNBC, Wall Street was expecting revenue of $9.3 billion and EPS of $2.32.

Qualcomm, which makes chips and wireless telecommunications parts for Android and iPhone devices, also provided its outlook on its fiscal third quarter, which exceeds analysts' forecast. The company expects revenue in the range of $8.8 billion to $9.6 billion and EPS in the range of $2.15 to $2.35. This compares with Wall Street's outlook for revenue of $9.1 billion and EPS of $2.17, according to CNBC.

Why Qualcomm's dividend hike matters

Notably, Qualcomm's earnings report included news that it hiked its dividend over the three-month period. The announcement was first made in early March that the company would increase its quarterly dividend by 6.3% to 85 cents per share quarterly, equating to an annualized dividend of $3.40 per share. QCOM is one of the top dividend stocks around, having hiked its annual payout for 21 straight years.

"Shares in companies that raise their payouts like clockwork decade after decade can produce superior total returns (price change plus dividends) over the long run," writes Dan Burrows, senior investing editor at Kiplinger, in his feature on Wall Street's best dividend stocks. 

Additionally, companies that consistently grow their dividends can offer investors peace of mind, Burrows adds. "After all, any company that manages to raise its dividend year after year – through recession, war, market crashes and more – is demonstrating both its financial resilience and its commitment to returning cash to shareholders."

Where does Qualcomm stand with analysts?

According to S&P Global Market Intelligence, the consensus analyst target price for QCOM stock is $182.62, a slight premium to current levels. Meanwhile, the consensus recommendation on the tech stock is Buy.

Susquehanna Financial Group is one of the more bullish outfits on Qualcomm stock with a Buy rating and $205 price target, representing implied upside of roughly 14% to current levels.

"Qualcomm has defined the cutting-edge cellular standard by consistently 'moving the goal posts' in baseband capabilities for the last two decades," Susquehanna analyst Christopher Rolland said in a May 2 report. “Every time a competitor matches Qualcomm's technology, they quickly add important new 'table-stakes' features. Additionally, the company's efforts around diversification are paying off as the company transcends handsets."

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