Covered, compounding — a thin yield, well funded. A 1.13% yield on a 52.25% trailing payout is covered income, not income for its own sake: $1.10 a quarter, raised in February 2026 by 11%, from $0.99, for a 22nd consecutive year of increases. Trailing-12-month free cash flow of $4.6 billion at fiscal Q1 2026, against a dividend that takes about half of earnings, leaves room for the R&D spending the chip cycle demands.
Key risk: Semiconductor cyclicality — industrial and data-center demand can swing sharply, and a down cycle cuts the earnings cushion behind this payout faster than the dividend itself moves.
Changes if: Trailing payout pushes well past 52.25%, or free cash flow falls toward the dividend total. Earnings coverage, not the streak alone, is the tripwire here.
- ✓Payout-coverage check: 52.25% trailing — the $4.40 indicated dividend leaves about half of earnings retained, and trailing-12-month free cash flow of $4.6 billion at fiscal Q1 2026 backs it.
- ✓Yield check: 1.13% indicated — $1.10/qtr × 4 at the $391.07 close on Oct. 23, 2026. Real, earned cash — thin, because the price has run, not because the payout is small.
- ✓Dividend growth check: 22 consecutive years of increases; the latest raise, declared Feb. 17, 2026, lifted the quarterly dividend 11%, from $0.99 to $1.10.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.