The QCOM Thread

[Otter]

At fenders' request, a thread presenting my investment thesis for QCOM. Tech sector makes up a fairly small percentage of my overall dividend income stream (roughly 4.5%). Accordingly, I am looking to increase my income derived from that sector (wouldn't mind up to 7.5% eventually). One of the few tech dividend growth stocks that I think represents a fair or better value at the moment is QCOM:

First, just the stats. Current P/E ratio (using FAST Graphs' blended formula, which is not TTM) at 14.2, or roughly 4% below its 10-year average P/E. A- credit rating. Current yield of 4.7%. 16 years of consecutive dividend growth. 5-year annualized dividend growth rate of 13.3%. Chowder number of 18. It is currently trading at a price roughly equivalent to 2016 and 2011 lows. Analyst growth estimates (for whatever those are worth), indicate substantial earnings growth in the next several years.

Yes, there are short-term headwinds from AAPL litigation. A long-winded overview of the wide-ranging litigation can be found here: https://www.digitaltrends.com/business/a...comm-news/  

Frankly, having dealt extensively with commercial litigation, this all looks like posturing in advance of a negotiated business solution. I may be wrong on that, but I suspect that Apple knows, like just about everyone else, that QCOM's modem technology is superior to competitors', such as Intel (there's a reason Apple used them for so long). QCOM's new 5G chipsets will likely lead the industry in the near-term, and serve as a powerful driver of QCOM profits, regardless of whether Apple uses them: https://www.theverge.com/circuitbreaker/...modem-2020

I suspect that Apple wants to negotiate a better long-term deal with QCOM and is using the litigation as leverage. Again, I could be wrong on that. Perhaps Apple feels that arguing about patents on chipsets that are about to be obsolete is a critical business move, or that it can destroy QCOM entirely and not have to worry about competitors using their superior modems, or it could be some other motivation entirely, but I think those motivations/outcomes are far less likely.