ASML’s Dividend Is the Most Overlooked Part of the AI Chip Trade
ASML just posted a record quarter and watched its stock drop anyway, but the number most investors ignored tells a quieter story about how the company actually rewards shareholders.
ASML (NASDAQ:ASML | ASML Price Prediction) posted a record quarter last week, and the stock still fell 6.8% over the past five sessions. Reuters described the reaction as a “sold-out” outlook that drives investors to look past demand. One thing worth noting is the cash ASML returns to shareholders, which gets far less attention than its EUV lithography monopoly.
What ASML Pays Income Investors Right Now
The next payment is $2.107668 per New York registry share. It was announced October 15, 2026, goes ex-dividend October 27, 2026, and is payable November 4, 2026. At $1,631.30, the annualized forward dividend of $8.430672 works out to a yield of about 0.52%. The trailing yield is roughly 0.56%.
A yield that small makes it easy to see why income investors skip ASML. The growth rate tells a different story. The total dividend for 2025 came to €7.50 per share, up 17% from 2024. In dollars, that was $8.7113 against full-year EPS of $28.7007, a payout ratio of about 30%.
Why the Dollar Amount Keeps Shifting
ASML declares its dividend in euros. On the earnings call, management confirmed the second interim dividend for 2026 at €1.88 per ordinary share, the same as the first. In dollars, though, the August payment was $2.15072. Because the payout is converted from euros, the amount U.S. holders receive moves with the exchange rate even when the board leaves the euro dividend unchanged.
Free Cash Flow Leaves Plenty of Room
ASML generated $12.71 billion of free cash flow in the third quarter alone. That covered the quarter’s $4.56 billion of buybacks roughly 2.8 times. CFO Roger Dassen tied the surge to prepayments.
He said cash flow was “Underpinning the strong order momentum of our customers and related down payments.”
For full-year 2025, free cash flow of $12.81 billion covered financing outflows about 1.27 times. In addition, a new buyback of up to €12 billion runs through December 31, 2028, and most of the shares bought back will be canceled.
CEO Christophe Fouquet said demand is outpacing supply:
“We now expect that our supply as currently planned for both 2027 and 2028 will not fully meet the demand of our customers.”
How ASML Compares With Applied Materials and Lam Research
Applied Materials (NASDAQ:AMAT) raised its quarterly dividend 15% to $0.53, its ninth consecutive year of increases. Last quarter it returned $420 million in dividends and $440 million in buybacks. Lam Research (NASDAQ:LRCX) pays $0.26 per quarter and bought back $1.16 billion of stock in the March quarter. In a single quarter, ASML’s buyback was larger than either peer’s.
Applied CEO Gary Dickerson described the same boost:
“The rapid global adoption of AI drives unprecedented demand for our materials engineering solutions.”
China Risk Income Investors Should Track
The biggest risk is China. ASML expects China to account for around 20% of 2026 sales, and export controls could restrict shipments. Fouquet said market access is the key variable:
“As long as we have good market access, as long as our customers can trust they can walk with us, I think that the likelihood of major competition in China is still pretty low.”
Cash flow can also be uneven. Free cash flow was negative at -$3.08 billion during the first quarter. The next milestones are the January 2026 dividend proposal and the June 10, 2027 Capital Markets Day. The broader read-through is that the AI expansion rewards the companies supplying the picks and equipment, and we rounded up seven of them beyond the chipmakers in a free report here.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
