Real yield, thin cash cover until recently. A 2.1% yield from a $1.52 quarterly dividend, raised 7% for a 23rd straight year. Earnings cover is thin at a 73.7% payout, and free cash flow did not cover the dividend at the capex trough — $2.4B of trailing FCF against $4.9B paid at Q3 2025. Trailing FCF recovered to $8.4B by Q3 2026, restoring cover while capex stays down.
Key risk: The fab build-out: a return to heavy capex, or a semiconductor downcycle that cuts earnings, would push the dividend back above free cash flow — as it was through 2025, when dividends paid exceeded FCF.
Changes if: FCF holds above the dividend through a full capex cycle at the $1.52 rate, with cover no longer depending on CHIPS Act incentives — or capex rises again and FCF drops back below what the dividend costs.
- !Payout-coverage check: 73.7% of trailing earnings — $5.68 declared against $7.71 diluted EPS over the 12 months to Q3 2026. FCF cover only just returned: $5.17B of dividends paid against $8.42B of trailing FCF, after $4.95B paid against $2.42B of FCF a year earlier.
- ✓Yield check: 2.1% forward — $1.52 a quarter, $6.08 a year, at the Oct 23, 2026 close of $284.69. That clears the House income line for a single stock.
- !Dividend growth check: 23rd consecutive annual raise in September 2026, up 7% to $1.52. The streak holds, but the pace had slowed — declared dividends rose about 5% in both 2024 and 2025.
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.