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Analog Devices

Analog Devices (ADI:NASDAQ) designs and manufactures high performance integrated circuits (ICs), software and systems that leverage analog, mixed & digital signal processing technologies as well as power solutions They have an incredible 58 years of experience.

The company is a leader in the semiconductor industry helping bridge the gap between the physical & digital worlds. It’s technologies drive advancements in factories helping digitise industries. ADI also assist in mobility and the Health Care sectors.

In layman’s terms ADI’s products convert signals like: Audio, light, speed, pressure & motion into binary code: 010010101010

Physical world —————————————————————————— Cyber World

Total 2022 revenue came in at £12 billion splits across these various sectors:

  • B2B 87%
  • Industrial 51%
  • Automotive 21%
  • Communications 16%
  • Consumer 13%

The company is claiming that 25% of its products are aligned with high growth markets fuelled by increasing digitisation and sustainability goals.

Edge computing offers unparalleled safety and speed and is set to grow from 10% now to 75% by 2025. Applications included AR/VR, the meta-verse and autonomous driving.

What I like about ADI is that their production is not all in one place, its spread across four foundries, Beaverton USA, Limerick Ireland, Taiwan & Japan.

Over their 58 years they have built relationships with 125,000 customer. Please see the image below for a quick snapshot of their success as a leading suppliers to industry:

Need I say much more to why I added ADI’s equity to the portfolio in May 2023, company debt is low at <1.0x as of Q4 2022

Dividends have grown for 19 straight years targeting 40%-60% (FCF) of Free Cash Flow.

Any excess cashflow is allocated towards share repurchases. Shares reduced by nearly 4% during 2022. Over the past 10 years total return to shareholders is 350%. Cash returned to shareholders over the last 10 years equates to $15 Billion Dollars.

Shareholder distributions are paid quarterly with the most recent declared $0.92 cents in March 2024 (Ex Dividend 04.03.24).

ADI is a solid established profitable business I like.

If you would like to discover more, you can go directly to the ADI website by clicking here.

P/E: 31.01 (31/03/24)

Forward P/E: 34.44 (31/03/24)

Dividend Yield: 1.86% (31/03/24)

The fourth dividend of £28.72 was received in March 2024.

Total income to date is £82.64, further dividend analysis can be viewed in the file below.

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