Despite high inflationary pressures and supply chain woes related to continued chip shortage, the Zacks Wireless Equipment industry appears well-poised to benefit from pent-up demand with the gradual revival in post-pandemic market conditions. The industry is benefiting from higher demand for scalable infrastructure for seamless connectivity amid a wide proliferation of IoT devices. A steady pace of 5G deployment and investments by leading carriers to upgrade their network infrastructure and increase their fiber footprint to meet the increasing demand for flexible data, video, voice and IP solutions also seems to have buoyed the industry growth.
However, the demand-supply imbalance owing to an acute shortage of chips, which are the building blocks for various technological equipment, has largely affected the profitability of companies due to inflated equipment prices. To weed off the liquidity crisis, various firms have resorted to cost-cutting measures such as furloughs, layoffs and reductions in discretionary expenses.
Some firms looked beyond the short-term funding avenues, such as revolving lines of bank credit, to bridge temporary cash shortfalls. Others have employed dividend cuts or suspension of dividend payments until the overall situation improved. Although a bulk of the firms across diverse sectors has increasingly followed the drift, a handful has chosen to swim against the tide and continue rewarding shareholders with steady dividends.
We have run the Zacks Stocks Screener to identify stocks that have a dividend yield in excess of 2% with five-year historical dividend growth of more than 0.1%. In order to shortlist the stocks, we have handpicked those that possess either a Zacks Rank #3 (Hold), Zacks Rank #2 (Buy) or Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here. Here are two key picks that made the list from Zacks Wireless Equipment industry.
Ericsson: Founded in 1876 and headquartered in Stockholm, Sweden, Ericsson is a leading provider of communication networks, telecom services and support solutions. The company is reportedly the world's largest supplier of LTE technology with a significant market share and has established a large number of LTE networks worldwide. It is in demand among operators to expand network coverage and upgrade networks for higher speed and capacity.
Ericsson is focusing on 5G system development and has undertaken many notable endeavors to position itself for market leadership on 5G. The company believes that the standardization of 5G is the cornerstone for digitizing industries and broadband. Ericsson foresees mainstream 4G offerings giving way to 5G technology in the future. The deployment of 5G networks is expected to boost the adoption of IoT devices, with technologies like network slicing gaining more prominence.
This Zacks Rank #3 stock has a dividend yield of 2.4% and a five-year historical dividend growth of 22.9%. Check Ericsson's dividend history here.
Ericsson dividend-yield-ttm | Ericsson Quote
InterDigital Inc.: Headquartered in Wilmington, DE, InterDigital is a pioneer in advanced mobile technologies that enables wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
InterDigital's commitment to licensing its broad portfolio of technologies to wireless terminal equipment makers, which allows it to expand its core market capability, is laudable. It has leading companies, such as Huawei, Samsung, LG and Apple, under its licensing agreements. The company is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets.
InterDigital aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, IoT and allied technology areas by leveraging its research and development capabilities, technological know-how and rich industry experience. At the same time, it intends to enhance its licensing revenue base by adding licensees and expanding into adjacent technology areas that align with its intellectual property position.
This Zacks Rank #3 stock has a dividend yield of 2.2% and a five-year historical dividend growth of 0.9%. It has a long-term earnings growth expectation of 15%. Check InterDigital's dividend history here.
InterDigital, Inc. dividend-yield-ttm | InterDigital, Inc. Quote
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