Why Analog Devices Inc (NASDAQ:ADI) Is A Dividend Rockstar

Dale Lombardi

There is a lot to be liked about Analog Devices Inc (NASDAQ:ADI) as an income stock, over the past 10 years it has returned an average of 3.00% per year. The stock currently pays out a dividend yield of 2.15%, and has a market cap of US$33.10B. Let’s dig deeper into whether Analog Devices should have a place in your portfolio. Check out our latest analysis for Analog Devices

Here’s how I find good dividend stocks

When researching a dividend stock, I always follow the following screening criteria:

  • Does it pay an annual yield higher than 75% of dividend payers?

  • Has it paid dividend every year without dramatically reducing payout in the past?

  • Has dividend per share amount increased over the past?

  • Can it afford to pay the current rate of dividends from its earnings?

  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

NasdaqGS:ADI Historical Dividend Yield Apr 4th 18
NasdaqGS:ADI Historical Dividend Yield Apr 4th 18

How well does Analog Devices fit our criteria?

The company currently pays out 85.37% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 33.51%, leading to a dividend yield of 2.15%. However, EPS should increase to $4.03, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of ADI it has increased its DPS from $0.72 to $1.92 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Analog Devices has a yield of 2.15%, which is high for Semiconductor stocks but still below the market’s top dividend payers.

Next Steps:

Keeping in mind the dividend characteristics above, Analog Devices is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three key aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for ADI’s future growth? Take a look at our free research report of analyst consensus for ADI’s outlook.

  2. Valuation: What is ADI worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether ADI is currently mispriced by the market.

  3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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