Looking for the Best 5G Stocks? Check Out SWKS
In the world of 5G stocks, there’s no shortage of exciting tickers. There’s also no shortage of “boring” 5G stocks—like the dividend-paying telecom giants that have been around for decades.
Simply put, 5G is going to be a major opportunity for numerous businesses—from start-ups to legacy tech companies. So if the question is what the best 5G stocks are, the answer really depends on investors’ own preferences, such as how much risk they’re willing to take and what their investment objectives are.
That said, I believe Skyworks Solutions Inc (NASDAQ:SWKS) is a name that deserves the attention of most 5G stock investors.
Skyworks is a semiconductor company headquartered in Irvine, CA. Its solutions are used in a wide range of applications in the aerospace, automotive, broadband, cellular infrastructure, connected home, industrial, medical, smartphone, tablet, and wearable markets.
On the financial growth front, Skyworks has been doing a fantastic job.
According to its latest earnings report, the company generated $1.1 billion of revenue in the third quarter of its fiscal 2021, which ended July 2. The amount not only represented a whopping 52% increase year-over-year, but also set a new record for the company. (Source: “Skyworks Reports Q3 FY21 Results,” Skyworks Solutions Inc, July 29, 2021.)
As you might expect from a top 5G stock, Skyworks is playing a critical role in the world’s increasing 5G adoption. The company said that its “Sky5” platform is powering the upcoming smartphone launches by major original equipment manufacturers (OEMs), including Google—aka Alphabet Inc (NASDAQ:GOOG), Oppo, Vivo Mobile Communication Co., Ltd., and Xiaomi Corp (HKG:1810, OTCMKTS:XIACF).
5G is expected to continue to drive growth in Skyworks Solutions Inc’s business.
In its latest earnings conference call, the company’s chairman, president, and chief executive officer, Liam Griffin, said, “Looking ahead, we expect continued momentum as we execute on strong design wins with our mobile and broad market customers, levered by the performance gains of 5G.” (Source: “Skyworks Solutions, Inc. (SWKS) CEO Liam Griffin on Q3 2021 Results – Earnings Call Transcript,” Seeking Alpha, July 29, 2021.)
He added, “We are seeing a tipping point with 5G acting as the catalyst transforming entire industries from telemedicine and autonomous driving to factory automation and intelligent energy management.”
And it’s not just the company’s revenue that has been booming. In the reporting quarter, Skyworks Solutions Inc generated adjusted earnings per share (EPS) of $2.15. That’s up by 72% from the $1.25 of EPS earned in the year-ago period.
For the fourth fiscal quarter, management is projecting year-over-year revenue and adjusted EPS growth of 36% and 37%, respectively.
Mind you, SWKS stock is a ticker that appeals to more than just growth investors. That’s because Skyworks Solutions stock is also a dividend stock. Since declaring its first-ever dividend in April 2014, the company has raised its payout every single year. (Source: “Dividends,” Skyworks Solutions Inc, last accessed August 19, 2021.)
The latest dividend hike for SWKS stock arrived on the same day as the company’s third-quarter earnings report. The board of directors decided to boost Skyworks Solutions stock’s quarterly dividend rate by 12% from $0.50 to $0.56.
I know, compared to the capital gains delivered by growth stocks—especially in recent years—dividends don’t seem like much. But paying a dividend is a direct way for companies to return cash to their shareholders.
To see just how shareholder-friendly SWKS stock is, here’s a chart showing how much the company spent in aggregate on share repurchases and dividend payments in 2012, 2016, and 2020.
(Source: “Connecting Everyone and Everything, All the Time,” Skyworks Solutions Inc, last accessed August 19, 2021.)
Simply put, Skyworks Solutions stock is returning a lot more cash to investors than before.
Skyworks Solutions Inc (NASDAQ:SWKS) Stock Chart
Chart courtesy of StockCharts.com
As a top 5G stock, Skyworks Solutions stock made a swift V-shaped recovery after the pandemic-induced sell-off earlier last year. SWKS stock picked up more upward momentum toward the end of 2020, popped toward the end of January 2021, but seemed to encounter fairly strong resistance in the $195.00 to $200.00 range.
Skyworks Solutions stock has entered that range four times this year and even briefly broke above the $200.00 mark in April, but it has always pulled back.
For the stock to make new highs, Skyworks Solutions Inc will likely need to report continued outstanding growth figures—and perhaps see a bit more investor enthusiasm for the 5G sector.