Applied Materials, Inc. (NASDAQ: AMAT – $24.17) announced that its Board of Directors has approved a new $2 billion share repurchase program. This follows the completion of the $3 billion share buyback program originally approved by the Board on April 26, 2015. Applied Materials had about 1.1 billion shares of common stock outstanding as of its most recent fiscal quarter end. The Board of Directors also has maintained the quarterly cash dividend of $0.10 per share payable on the company’s common stock. The dividend is payable on September 15, 2016 to shareholders of record as of August 25, 2016, and yields investors 1.6% on an annualized basis. Over the past calendar year, Applied Materials has distributed more than $3.2 billion in the form of dividends and share repurchases. The company cited its ability to drive profitable growth as it continues to make significant progress in its semiconductor equipment and display businesses.
Despite the nearly 23% rise in the share price over the past twelve months, I am looking for Applied’s stock to offer above-average appreciation potential over the coming three to five years, as well as future dividend increases. Overall, I believe the business fundamentals remain intact, especially following the company’s strong second quarter earnings results and guidance.