Applied Materials-A Lifetime of Passive Income? This Artificial Intelligence (AI) Stock Just Raised Its Dividend 15%, With Lots of Room to Grow.

Company Overview - Applied Materials is a leading supplier in the semiconductor equipment sector, known for its diversified portfolio and strong cash flow generation [6][13] - The company has recently announced a significant dividend increase and a $10 billion share repurchase program, indicating strong shareholder returns [7][8] Financial Performance - Applied Materials increased its quarterly dividend from$ 0.40 to $0.46 per share, representing a 15% increase, effective June 12 for shareholders of record as of May 22 [7] - The company reported a 7% revenue growth and a 12% increase in adjusted earnings per share last quarter, with analysts projecting nearly 10% earnings growth over the next two years [8][10] Market Position and Growth Potential - The semiconductor equipment sector is expected to grow above GDP in the long term, with Applied Materials positioned to benefit from the ongoing AI revolution, which requires advanced chip manufacturing [5][11] - The company's forward dividend yield has risen to approximately 1.25%, providing an attractive entry point for investors [9] Shareholder Returns - The new dividend yield is well-covered by earnings, with a coverage ratio of 4.7 times based on fiscal 2024 earnings of$ 8.65 per share against the new $1.84 dividend [10] - The combination of share repurchases and dividend growth is expected to lead to substantial payouts in the long term, potentially outpacing inflation [13]