The last quarterly dividend was $0.446428 per ADR which multiplied by 4 is $1.7857 for a dividend yield of 1.367%. TSM stock dividend – Source: TSMC investor relations – dividend
As long as they keep reinvesting the equity at an ROE of above 20%, shareholders have nothing to worry. I am focusing on the dividend because that is how the company rewards its shareholders as the other 50% of net income is reinvested into growth. TSMC’s functional currency is TWD TSM stock intrinsic valuationįor a valuation I am going to take the dividend that quadrupled over the last decade. Total liabilities are just 32.16% of total assets and long-term liabilities are just 9.83% of total assets which puts TSMC in a very strong financial position. TSM stock analysis – Source: TSMC Q4 2020 Earnings presentation
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Operating cash flows have tripled and free cash flows quadrupled (5) over the past 10 years and even more in 2020 where free cash flows expanded to $9.25 billion. TSM stock analysis – Source: TSM stock quote Morningstar Net income (2) has been growing at a steady pace alongside earnings and dividends (3) and what is very important is that the company achieved it all without issuing any shares (4) like many current growth stocks do. Operating margins (1) have been improving over time but we must always keep in mind the high cyclicality of the sector as in exuberant periods there can easily be overcapacity that lowers margins like it had been the case in 2011 to 2013. The sector is a growth one which is always a good tailwind when investing if you make a mistake, the growth in demand might save your investment while if you nail the right business, you can expect great returns. TSM stock analysis – Source: TSMC Q4 2020 Earnings presentationĪll in all, global market leader in chip manufacturing making the chips for many companies, from Apple to Qualcomm. Smartphones are currently contributing to most of the revenue but as other segments like IoT, automotive and other grow, this might change over time and further grow both the top and bottom line for TSMC. Perhaps TSMC will lower its CAPEX in 2021, we will see. It is not yet known whether TSMC expected to get also a share of INTEL’s chip production as the company said earlier it has been exploring outsourced production but the new CEO recently said how most will still be kept inhouse. Given the environment we are in, the company must anticipate a huge surge in chipmaking, especially advanced chips. Its total foundry market share of 56% and it is about to spend $28 billion in 2021 to keep that position and to dissuade competitors from entering the field (constructing plant in Arizona too for US market). Taiwan Semiconductor (TSMC) is the world’s largest semiconductor foundry, it manufactures a lot of the chips that are in your phone and computer. The management expects low teens growth over the next few years.
Let’s look at the business, fundamentals and investing outlook and finish with a TSM stock valuation. However, it is also on the top of the list of MSCI emerging market index which means it has the largest market capitalization and thus could also be an expensive stock. TSM stock analysis – Source: TSMC investor relations This is also what one should look for when investing in companies a good growing market, high returns on equity, a strong balance sheet that makes you survive the cycles, organic growth that is possible thanks to a profitable operation. The reason for such an amazing stock performance are the fundamentals shown in the figure below. TSM stock has been an amazing compounder over the years and it is actually more than a 100 bagger. TSM stock analysis TSM stock price overview