Key Takeaways:
- ASML currently offers a 0.8% dividend yield.
- Earnings-per-share are projected to average 19% annual growth over the next 3 years, while dividends are expected to grow 11 to 14% annually.
- Analysts expect that ASML stock has about 30% upside today.
- Get accurate financial data on over 100,000 global stocks for free on TIKR >>>
ASML (ASML) holds a near monopoly in the semiconductor industry with its hold on the extreme ultraviolet lithography (EUV) machines market. This is one of the key technologies needed to produce the world’s most advanced chips.
The company has been quietly returning billions to shareholders through share buybacks and dividends while continuing to dominate a critical piece of the semiconductor supply chain.
With long-term demand for its tools intact and the stock down from recent highs, ASML could be one of the more compelling stocks available today, that just so happens to also be a dividend growth stock.
Why Has ASML’s Stock Price Dropped?
ASML is down just over 25% in the past year.
Besides the recent market volatility that’s pulled most stocks down, ASML stock has fallen due to cyclical concerns:
- Demand for semiconductors has softened temporarily
- Export restrictions to China have added some uncertainty to the near-term outlook. As a result, customers like memory chipmakers have been a bit slower to place new orders.
Even with lower demand and export restrictions, the business remains strong through market uncertainty.
Find the best stocks to buy today with TIKR (It’s free) >>>
Analysts Think The Stock Has 30% Upside Today
A total of 32 analysts have an average price target of $774/share for ASML today. That means they see over 30% upside for the stock today.
Analysts’ estimates arenʼt always accurate, but it’s clear that they see meaningful upside for the stock.
Analysts’ price targets have fallen in the past year, but the stock still looks undervalued today because the share price has fallen alongside price targets.
1: Dividend Yield
ASML currently offers a dividend yield of around 0.8%.
That might not seem huge, but it’s important to remember that investors are buying a semiconductor equipment producer that’s a near-monopoly business that just so happens to pay a dividend.
Over the past five years, ASML’s yield has mostly stayed under 1%, only rising above that level during brief pullbacks in the stock’s price.
Still, the company has consistently rewarded shareholders through growing dividends, stock buybacks, and occasional special payouts. It’s not a traditional dividend play, but for long-term investors, ASML’s mix of growth and disciplined capital returns can be just as powerful.
Find high-quality dividend stocks that are even better than ASML today. (It’s free) >>>
2: Dividend Safety
At the end of 2024, ASML had a dividend payout ratio of just 33.3%, which means that only about one-third of the company’s earnings were paid out to shareholders as dividends.
We like to see stocks with a payout ratio below 70%, so ASML has a very low payout ratio.
This gives ASML plenty of flexibility to reinvest in its business while still increasing dividends. The company generated over $9.1 billion in free cash flow last year and with cash exceeding total debt, ASML has a very strong balance sheet.
Strong cash generation, low dividends, and negative net debt all point to one thing: ASML’s dividend is very safe.
See ASML’s full growth forecast. (It’s free) >>>
3: Dividend Growth Potential
Analysts expect ASML to grow earnings-per-share by an average of 19% annually from 2025 through 2027, following a brief dip in 2024.
Forecasts suggest dividend per share growth will hover between 11% and 14% annually over the next few years.
It’s not the fastest-growing dividend in the market, but it’s backed by a monopoly-like business that continues to expand its earnings power. For long-term investors, that could be a stock worth betting on.
TIKR Takeaway
ASML has a dominant market position, strong financials, and a proven ability to grow. ASML could be a great stock for dividend growth investors and investors simply interested in high-quality businesses.
The TIKR Terminal offers industry-leading financial data on over 100,000 stocks and was built for investors who think of buying stocks as buying a piece of a business.
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
