Key Takeaways:
- Analysts expect Lam Research to grow dividends at an 11% CAGR over the next 3 years.
- Lam only offers a 1% dividend yield, which is relatively high for a semiconductor company.
- It’s likely that $LRCX has more upside than the analysts’ price target suggests.
- Get accurate financial data on over 100,000 global stocks for free on TIKR >>>
Lam Research is one of the most critical suppliers in the semiconductor equipment space. Its tools are essential for producing the chips that power smartphones, data centers, AI, and more.
While the stock has experienced some short-term weakness, Lam continues to generate strong cash flow and reward shareholders through growing dividends.
Lam Research could be a compelling long-term opportunity for dividend investors seeking exposure to the growing AI and advanced memory chips market.
Why Is Lam Research Stock Up About 20% in the Past Month?
Lam’s share price is up over 20% in the past month because of a few key positive factors:
- AI Demand Tailwinds: Investors are growing more confident in Lam’s exposure to AI-related chip manufacturing, particularly in memory and advanced packaging.
- Positive Guidance: The company recently gave a more optimistic outlook for equipment demand for the second half of the year.
- Valuation Rebound: After trading at a discount earlier this year, the stock has bounced as investors re-rate high-quality chip equipment names.
Even with the stock up nearly 20% in the past month, analysts still think the stock is slightly undervalued today.
Analysts Think the Stock Has About 5% Upside Today
As of mid-May 2025, Wall Street analysts have a consensus price target of $90/share for Lam Research, while the stock currently trades around $85/share.
That implies that the stock has a small 5.3% upside from current levels, but it’s likely that this is an understatement.
If earnings growth picks up as expected through 2027, Lam could easily be worth over $100/share today.
Interestingly, one analyst has a price target as high as $125/share, reflecting the optimism some analysts have around the company’s potential rebound in earnings.
See why Lam Research might have more upside than analysts think with TIKR (It’s free) >>>
1: Dividend Yield
Lam’s forward dividend yield currently sits at 1%, just under its 5-year average of 1.2%.
While not the highest-yielding stock, Lam’s growing dividend and industry leadership make it attractive for long-term investors.
Additionally, it’s relatively rare for semiconductor companies to pay dividends, so Lam could be a nice stock for dividend investors interested in semiconductor exposure.
Find dividend growth stocks better than Lam Research with TIKR. (It’s free) >>>
2: Dividend Safety
In 2024, Lam paid out $0.80 per share in dividends while generating $3.03 in EPS. That translates to a dividend payout ratio of just 26%, which is well below the 70% threshold that’s typically considered healthy.
Earnings are expected to rise to $4.68 per share by 2027, and dividends are projected to increase to $1.06. That would bring the future payout ratio down to just 23%, giving Lam plenty of flexibility to reinvest in the business while continuing to raise its dividend.
See Lam Research’s full growth forecast and analyst estimates. (It’s free) >>>
3: Dividend Growth Potential
Lam has a history of dividend growth, with the stock averaging over 10% annual dividend growth in the past 5 years. Analysts expect that trend to continue, projecting an 11% compound annual growth rate for dividends from mid-2025 through mid-2028, which is an impressive pace.
EPS growth is projected to bounce back with a 32% increase in 2025 and grow at a 9% CAGR over the next 3 years.
This earnings recovery should comfortably support ongoing dividend hikes, making LRCX an appealing semiconductor dividend growth stock.
TIKR Takeaway
Lam Research offers a rare mix of growth, dividend, and exposure to a long-term secular trend in semiconductors.
With a strong balance sheet, reliable cash flow, and a healthy payout ratio, the stock looks like a solid long-term holding for dividend growth investors.
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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!
