Key Takeaways
- Qualcomm shares fell about 10% on Nov. 5 after its fiscal fourth-quarter handset revenue dropped 26%, while Texas Instruments grew third-quarter revenue 28% and raised its dividend 7% in September.
- Qualcomm’s dividends used 45% of its free cash flow over the twelve months to Sept. 27, 2026, against 71% at Texas Instruments over the twelve months to Sept. 30.
- Texas Instruments paid more in dividends than it generated in free cash flow in each of fiscal 2023, 2024 and 2025.
- Qualcomm trades at 17x forward earnings, against 24x for Texas Instruments.
Qualcomm (QCOM) shares fell about 10% on Nov. 5, the day after its fiscal fourth-quarter report showed handset revenue down 26% from a year earlier. Its revenue outlook for the December quarter, $10.4 billion to $11.2 billion, sits well below the $12.3 billion it reported for that quarter a year ago.
Texas Instruments (TXN) is having the opposite year. Its third-quarter revenue rose 28%, and in September it raised its dividend 7%.
Both yield a little over 2% today. So if you could hold only one for the next 10 years, which should it be?
| Metric | Qualcomm (QCOM) | Texas Instruments (TXN) |
|---|---|---|
| Dividend yield | 2.3% | 2.2% |
| Annual dividend | $3.68 | $6.08 |
| Dividend growth, fiscal 2020-2025 | 6.5% a year | 8.1% a year |
| Cash dividend payout ratio (TTM) | 45% (to Sept. 27, 2026) | 71% (to Sept. 30, 2026) |
| Net debt / EBITDA | 0.8x | 0.5x |
| Interest coverage | 13.1x | 15.1x |
| Forward P/E | 17x | 24x |
Source: TIKR, Nov. 9, 2026.
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Qualcomm’s dividend has room to spare
Qualcomm’s revenue fell 3% in fiscal 2026, the year to Sept. 27, to $43.12 billion from $44.28 billion. Management puts the handset slide down to memory prices hitting the smartphone market and the ramp-down of its Apple business after the modem transition. Its newer businesses are growing, and it’s targeting $5 billion of data center revenue in fiscal 2027.
“Fiscal 2027 marks the start of our non-handset revenue inflection, including the ramp of our Data Center business,” CEO Cristiano Amon said in the results release.
The weaker year showed up in free cash flow, which fell from $12.8 billion in fiscal 2025 to $8.65 billion in fiscal 2026, while dividends paid rose to $3.85 billion from $3.81 billion:
Even so, dividends used a comfortable 45% of free cash flow in fiscal 2026, and that ratio has stayed between 30% and 47% every year since fiscal 2021. The risk is that handsets, still its biggest business, shrink faster than the new businesses grow.
Texas Instruments’ cash is only just back
Texas Instruments’ third quarter ran the other way. Revenue rose 28% from a year earlier to $6.06 billion, and earnings per share jumped 77% to $2.62. The Sept. 17 raise, to $1.52 a quarter from $1.42, “marks 23 consecutive years of dividend increases,” TI said.
Coverage had a rough stretch, though. Dividends ran well ahead of free cash flow from fiscal 2023 through fiscal 2025, with $5.00 billion paid against $2.60 billion of free cash flow in fiscal 2025 alone:
Over the twelve months to Sept. 30, 2026, free cash flow climbed to $7.32 billion from $2.60 billion in fiscal 2025. Cash from operations rose 43% over the same twelve months, which CEO Haviv Ilan credited in part to “the benefit of 300mm production.” Dividends took 71% of that free cash flow, against 192% in fiscal 2025.
A 71% payout is covered, but it leaves much less room than Qualcomm’s if industrial or automotive demand turns down again.
So which dividend wins?
If I could hold only one of these for the next 10 years, it’d be Qualcomm.
The income is close either way. At each dividend’s 5-year growth rate, $10,000 in Texas Instruments would pay about $3,207 over the decade, about $104 more than Qualcomm’s $3,104. But at the pace each grew in fiscal 2025, 5.5% for Qualcomm and 4.6% for TI, Qualcomm would pay about $2,955 to TI’s $2,711, about $244 more.
So the pick comes down to which company can keep raising its dividend, and Qualcomm’s 45% payout gives it far more room than TI’s 71%. Qualcomm is also the cheaper stock, even after its multiple moved above its five-year average:
At 17x forward earnings, Qualcomm sits above its 14x average, but well below its 26x high in May and TI’s 24x.
TI’s case is a strong one. Its business is growing quickly, its 7% raise in September came in ahead of its 4.6% rise in fiscal 2025, and a company that aims to hand back all its free cash flow can raise faster as that cash grows. It’s just that I’d rather start a 10-year hold with the cushion already in place.
Of course, Qualcomm still has to show that its businesses beyond phones can make up for handsets, so its $5 billion data center target for fiscal 2027 is the number to watch.
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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 of the stocks mentioned. Thank you for reading, and happy investing!
