TheBadPlaceYahoo Finance | This Dividend Stock Is Down 8% and That Makes It One of the Best Buys of the Year
Texas Instruments (NASDAQ: TXN) is the world's largest maker of analog semiconductor chips, a position that may seem out of step amid the current AI chip frenzy. However, the company's analog chips are essential backbone components in data centers, where demand for high-performance power management and signal-chain chips is growing rapidly due to AI server electricity consumption. CEO Haviv Ilan noted that Texas Instruments' sales to data centers grew 70% year over year in the fourth quarter, underscoring its relevance in the AI infrastructure boom despite its focus on legacy semiconductor technologies.
The company boasts a strong dividend history, having increased its payout for 22 consecutive years, including a 4% raise in 2025, resulting in a current dividend yield of 2.9%. Over the past decade, Texas Instruments has grown its dividend by 273%, reflecting consistent shareholder returns. This reliability is supported by significant capital investments, including a $30 billion 300-millimeter fabrication facility in Sherman Oaks, Texas, which began production in December 2024 and will focus on mature process chips for automotive, industrial, and consumer electronics, reducing reliance on external foundries and enhancing supply chain control.
Despite a recent 8% stock dip, Texas Instruments presents a compelling buying opportunity as its capital expenditures are expected to decline from a peak of $5 billion to between $2 billion and $5 billion annually, potentially boosting free cash flow—already up 96% in 2025 to $2.9 billion. The company reported $17.7 billion in revenue and $5.45 EPS in 2025, up 13% and 4.8% respectively. Its vertical integration strategy, aiming to produce 95% of wafers internally by decade’s end, offers cost advantages through 300mm wafers, which yield 40% more chips per wafer than older 200mm standards, positioning the company for sustained profit and dividend growth.
Read more: https://finance.yahoo.com/markets/stocks/articles/dividend-stock-down-8-makes-133500383.html
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