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Applied Materials Hikes Dividend, Despite Soft Guidance

Applied Materials Inc. (AMAT) is a leader in materials engineering solutions, which produce virtually every new chip and advanced display in the world. The company provides manufacturing equipment, services and software to the semiconductor, display and related industries.

The company generated 43% of its revenue from Semiconductor Systems, 39% from Applied Global Services, 17% from Display and Adjacent Markets and 1% from Corporate and Other in 2020. In terms of customer concentration, both Samsung Electronics and TSMC accounted for 18% of its total sales.

Soft Long-term Guidance

Applied Materials recently announced long-term FY 2024 guidance of $23.5-31 billion in revenue and $7-$10 in earnings per share, which compares to FY 2020 revenue of $17.2 billion and $4.17 per share in earnings.

While the guidance was softer than many analysts expected, most were quick to call the guidance “conservative,” saying that it sets the stage for future earnings beats and raises. Many analysts also continue to see strong equipment demand drivers as production complexity grows and scaling becomes efficient.

The company raised its quarterly dividend by 9.1% to $0.24 per share, which represents a 0.69% forward yield. The dividend is payable on June 17, 2021 to shareholders on record as of May 27, 2021.

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