Covered — incidental income, growth engine. A 0.81% yield on a 33.2% GAAP payout is covered income that is incidental to the holding: $0.65 a quarter, raised in December 2025 by 10%. Q3 fiscal 2026 free cash flow was $13.7 billion on $29.6 billion of revenue, so the dividend takes a small slice of cash generation — the income here is a byproduct, not the point.
Key risk: AI concentration — Q3 AI semiconductor revenue of $16.7 billion grew 221% year over year, so a pause in custom-accelerator demand or a major customer shift would move earnings and the price far more than the dividend rate.
Changes if: Free cash flow falls toward the dividend, or the payout pushes well past 33.2% of GAAP earnings. On Q3 cash generation the dividend is a small slice today.
- ✓Payout-coverage check: 33.2% of TTM GAAP EPS of $7.83 — $2.60 indicated — and Q3 fiscal 2026 free cash flow of $13.7 billion covers the quarterly rate many times over.
- !Yield check: 0.81% indicated — $0.65/qtr × 4 at the $321.68 close on Oct. 23, 2026. Real and covered, but incidental: this is not a yield holding, and the income alone does not carry the case.
- ✓Dividend growth check: 15 consecutive years of increases; the latest raise, in December 2025, lifted the quarterly dividend 10%, from $0.59 to $0.65.
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.