Texas Instruments Has Raised Its Dividend for 23 Years. Here Are 3 More Tech Income Stocks
π Texas Instruments raised its quarterly dividend by 7% to $1.52 per share for the 23rd consecutive year of increases.
π° The company generated $8.4 billion in trailing free cash flow, with management pledging to return all free cash flow to owners over time.
π Capital spending is expected to decrease to $2B-$3B in 2026 as the heavy 300mm factory expansion winds down.
π TXN trades at 27 times forward earnings after a significant 74.51% year-to-date stock price gain.
β οΈ Dividend coverage could tighten if the $1.6 billion in CHIPS Act incentives included in trailing free cash flow fade.
π Demand for TXN's analog and embedded chips is diversified across industrial, automotive, data center, and consumer electronics sectors.
Bullish Signals
- Texas Instruments raised its quarterly dividend by 7% to $1.52 per share, marking the 23rd consecutive year of annual increases.
- The company generated $8.4 billion in trailing free cash flow and management commits to returning all free cash flow to owners over time.
- Capital spending is expected to decline to $2B-$3B in 2026 as the heavy 300mm factory expansion winds down, potentially increasing free cash flow available for shareholders.
Risk Factors
- Trailing free cash flow includes $1.6 billion of CHIPS Act incentives, meaning dividend coverage could tighten if these incentives fade during a chip downturn.
- The stock trades at 27 times forward earnings after a massive 74.51% year-to-date gain, which may imply high valuation relative to recent performance.
Full Analysis
Texas Instruments (TXN) has increased its quarterly dividend by 7% to $1.52 per share, marking the 23rd consecutive year of annual increases. The company generated $8.4 billion in trailing free cash flow over the last 12 months, with management committing to return all free cash flow to owners over time. This payout represents a forward dividend yield of 1.83% and utilizes approximately 78.9% of its trailing earnings per share.
The semiconductor manufacturer is currently winding down its heavy 300mm factory expansion, which previously drove significant capital spending. Management expects 2026 capital expenditures to fall between $2 billion and $3 billion as this investment cycle concludes, potentially freeing up more cash for shareholders. The company holds $8.1 billion in cash and short-term investments against $13.65 billion in debt.
TXN operates across industrial, automotive, data center, and personal electronics markets, providing diversified demand sources for its analog and embedded chips. While the stock has gained 74.51% year-to-date and trades at 27 times forward earnings, a key risk identified is that trailing free cash flow includes $1.6 billion in CHIPS Act incentives. If these government incentives fade during a potential chip downturn, dividend coverage could tighten.