Texas Instruments Raised Its Dividend Again. Can Analog Chips Keep Funding It?
Texas Instruments just hiked its dividend for the 23rd straight year, but the cash funding that raise comes with some strings attached that every income investor needs to understand before celebrating.
Shareholders of Texas Instruments (NASDAQ:TXN | TXN Price Prediction) who are on record by October 30 will receive a quarterly dividend of $1.52 per share, up from $1.42. The 7% increase is the company’s 23rd consecutive year of dividend increases. The bigger news is in the cash flow: for the first time in years, free cash flow covers the payout with room to spare.
Free Cash Flow Is Back Above the Payout
In 2025, TI paid out $4.999 billion in dividends but generated only $2.94 billion of free cash flow, because capital spending on its 300mm expansion reached $4.55 billion. That gap has now closed. Third-quarter free cash flow came in at $2.96 billion, while dividends took $1.298 billion, or about 2.3 times coverage. Capex dropped to $463 million.
“Our cash flow from operations of $9.9 billion for the trailing 12 months again underscored the strength of our business model, the quality of our product portfolio and the benefit of 300mm production. Free cash flow for the same period was $8.4 billion.”
That statement came from CEO Haviv Ilan, and management described the raise as part of its “continued commitment to return all free cash flow to owners over time.”
Analog Chips Are Funding the Raise
Most of that cash comes from analog. Segment revenue reached $4.91 billion, up 32%, and operating profit rose 69%. Industrial sales grew more than 40% from a year earlier, data center climbed about 95%, and automotive grew mid-teens.
“The world is rebuilding its grid and the content is very rich with semiconductors.”
How Analog Devices and Microchip Compare
The closest peer, Analog Devices (NASDAQ:ADI), has run with a lower capital load. In fiscal 2025, it reported $4.81 billion in operating cash flow against $533.6 million in capex and $1.92 billion in dividends.
Microchip Technology (NASDAQ:MCHP) is in a weaker position. In fiscal 2026, it paid $1.09 billion in dividends on operating cash flow of only $962.1 million. That comparison shows how much TI’s dividend record depended on the payout continuing its own heavy-spending years.
Risks Behind the Raise
Some of the cash came from one-off help. Trailing free cash flow included $1.6 billion of CHIPS Act incentives. TI also has $13.65 billion of debt. Capex for 2026 is planned at $2 billion to $3 billion, and the 2027 figure depends on demand:
“There is a certain capex level to support 10% growth versus a higher capex level to support mid-teens growth, for example.”
CFO Julie Kinnett said careful allocation “will enable us to continue to deliver free cash flow per share growth over the long term.”
What Investors Should Watch Next
Over the long run, the payout has grown from $0.50 per quarter in late 2016 to $1.52 today. For the fourth quarter, TI guided to revenue of $5.80 billion to $6.30 billion and EPS of $2.45 to $2.79. Details on 2027 capital spending are expected on the February call. The stock is up 66.87% this year, so the annualized dividend yields about 2.1%. Key things to watch are whether free cash flow keeps growing once CHIPS money tapers off and capex picks back up, and whether analog demand keeps expanding.
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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.
