“AI Stock Increases Dividend by 15% – Potential for Lifetime Passive Income”

Applied Materials, a semiconductor equipment supplier, hikes dividend by 15% and initiates $10 billion buyback program, making it a top pick for dividend growth investors.

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As you navigate your investment journey from growth to generating income, finding the right balance is crucial. For those a few decades away from retirement, considering dividend growth stocks can be a smart move. These stocks, while offering steady growth potential, may not always impress with their current yields.

One such company worth exploring is Applied Materials, a powerhouse in the semiconductor equipment industry. Unlike chip designers, Applied Materials faces lower risks and capital intensity, making them an attractive option for investors seeking sustainable returns. With a market that typically outperforms GDP over the long term, Applied Materials stands out as a solid choice for Gen X and millennial investors.

Recently, Applied Materials announced a 15% increase in its quarterly dividend, taking it up to $0.46 per share. This move was complemented by a new $10 billion share buyback program, in addition to the existing $7.6 billion program. While the stock is currently down from its highs, the company continues to report strong numbers and consistent growth.

The combination of the dividend hike and the stock decline has led to a spike in Applied Materials’ forward dividend yield, now sitting at around 1.25%. Historically, such spikes have represented opportune moments to enter the stock. With earnings covering the dividend almost five times over in fiscal 2024, and projected earnings growth on the horizon, Applied Materials appears well-positioned for sustainable dividend growth.

Applied Materials’ strategic focus on etch, deposition, metrology, and ion implant equipment positions it favorably in the emerging AI-driven market. As the demand for cutting-edge logic chips and high-performance DRAM increases, Applied Materials is primed for continued growth. Additionally, with a diversified portfolio and strong services segment, the company is set to deliver substantial dividend growth in the years to come.

Looking beyond short-term market fluctuations, Applied Materials offers a compelling opportunity for investors seeking long-term income generation. With a solid track record, a commitment to shareholder returns, and a foothold in key growth sectors, Applied Materials represents a sound investment choice for the future.

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