Taiwan Semiconductor (TSM) has been a sizzling inventory in latest months. Because the world’s largest chipmaker, TSMC serves as a foundry for a few of the largest semiconductor corporations on this planet, together with Nvidia (NVDA), Superior Micro Gadgets (AMD), Qualcomm (QCOM), and Broadcom (AVGO). Shares are off to a terrific begin in 2026, up about 9% because the starting of the yr.
However one factor that could be ignored about TSMC is it’s burgeoning standing as a reliable dividend inventory. Taiwan Semiconductor simply introduced a 20% dividend hike, from $0.16 to $0.19. The dividend might be payable on April 9 for shareholders of document on March 23.
Though the dividend yield of 1% might not excite traders, it is notable that TSMC’s payout has now grown 120% within the final 5 years. Mixed with Taiwan Semiconductor’s spectacular inventory efficiency, TSMC is an attention-grabbing title for each progress and yield.
Based mostly in Taiwan, TSMC is finest recognized for creating the semiconductor business’s Devoted IC Foundry enterprise mannequin that manufactures chips for different corporations, reasonably than promoting and branding their very own merchandise.
In 2024, the corporate mentioned that it produced 11,878 completely different merchandise for tons of of consumers, utilizing 288 separate applied sciences. It will get nearly all of its cash from making 3 nanometer and 5 nanometer chips for high-performance computing, but it surely additionally makes merchandise for smartphones, cars, and Web of Issues merchandise.
TSMC has a market capitalization of $1.7 trillion, making it the sixth-largest publicly traded firm on this planet.
Shares are up 51% within the final yr, soundly outperforming the S&P 500. Its one-year efficiency displays the energy of the foundry market in the present day — Intel (INTC) is up a whopping 118%.
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Nonetheless, when you think about the valuations, TSMC seems to be far more interesting. Intel has a present ahead price-to-earnings (P/E) ratio of 78.2, whereas TSMC is a way more cheap 23.9.
Taiwan Semiconductor reported a powerful fourth quarter, with income of $33.7 billion, up 20.5% from the identical interval a yr in the past. Web earnings of $16.3 billion was up 35%, and TSMC reported earnings per share of $3.14, beating analysts’ expectations for $2.82.
For the complete yr, TSMC reported $122.42 billion in income, representing a 35.9% improve from the earlier yr. Administration issued steering for first-quarter income to be between $34.6 billion and $35.8 billion, which might be a 38% year-over-year achieve on the midpoint.
TSMC is within the midst of a $165 billion challenge to construct foundry capability in Arizona, the place it’s already making Nvidia Blackwell chips. The corporate plans to spend between $52 billion and $56 billion on capex this yr, up from $40.9 billion in 2025 and $29.8 billion in 2024.
CEO C.C. Wei mentioned TSMC continues to see robust progress because of the growth of AI and the demand for extra semiconductors.
“Wanting forward, we observe growing AI mannequin adoption throughout shopper, enterprise and sovereign AI phase. That is driving want for an increasing number of computation, which helps the sturdy demand for forefront silicon,” he mentioned. “Our clients proceed to offer us with their constructive outlook. As well as, our clients’ buyer, who’re primarily the cloud service suppliers, are additionally offering robust indicators and reaching out on to request the capability to assist their enterprise. Thus, our conviction within the multi-year AI megatrend stays robust, and we consider the demand for semiconductors will proceed to be very basic.”
TSMC has a key benefit in that it’s the first foundry for lots of the prime semiconductor corporations. Which means regardless of which firm wins the race to design one of the best AI chips, TSMC will doubtless be the foundry to really construct them. That’s one key motive why analysts are overwhelmingly bullish concerning the inventory.
Of 16 analysts who cowl TSMC inventory, 13 of them have “Sturdy Purchase” scores and one has a “Average Purchase” score. The remaining two recommend holding. None of them advocate promoting, and that sentiment has been constant for the final a number of months. Analysts have a consensus value goal of $386.45 on TSM inventory.
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TSMC has quite a bit going for it. The expansion in income and earnings ought to proceed to thrill traders, and the dividend seems to be very safe contemplating TSMC’s payout ratio is simply 23%. I anticipate this dividend and inventory value to proceed to develop over the subsequent few quarters, making TSMC a no brainer inventory to purchase proper now.
On the date of publication, Patrick Sanders had a place in: NVDA. All info and knowledge on this article is solely for informational functions. This text was initially printed on Barchart.com
