Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) Shows 15% Growth and 3% Dividend Yield

November 22, 2016

TSM logo
Taiwan Semiconductor Mfg. Co. Ltd.

Senior Portfolio Manager Rajesh Varma of DNCA Finance says that while Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) may not be on many U.S. investors’ radar screens, it is a big company that has shown 15% growth and now pays a 3% dividend.

Companies that require integrated chips go to [Taiwan Semiconductor]. You use integrated chips in everything, use them in phones and computers, iPads and laptops, you name it — in fridges, in cars and planes, in whatever. And so they have an incredibly varied client list, and they are in pretty much all the sectors.

It’s a company that’s shown me 10% to 15% growth every year, year in, year out. It pays me even now 3% dividend yield. It’s got net cash in its portfolio. And the stock continues to perform year in, year out, year in, year out, and I was taking a look at it, over the last five years, it’s up 200% in U.S. dollar terms approximately. It’s done well.

It’s a company that most U.S. investors don’t know about because it’s not on their radar screen. But it’s a market cap of $160 billion; it’s a big company. On a valuation basis, it’s trading at 15 times earnings, 8.5 times EV to EBITDA, and 8% of its market cap is cash. So it’s pretty good.

Rajesh Varma