The Bull Case for Chips

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I think from a business point of view, I think the bull case is there. Even though it's cyclical, I think they're not going to grow the business anytime soon. They're involved in so much and it's only getting bigger and bigger. The company has 19 years consecutive dividend increases that has a 24% CAGAR since 2004. You can easily read left Q3 or Q2, write TTM. It is designed for value investors. There's almost no bullshitting around here.

In this podcast episode, Derek and the European Dividend Growth Investor discuss two main topics: Unilever's performance and potential dividend outlook, as well as Texas Instruments' business breakdown and their thoughts on the stock.

For Unilever, they acknowledge the recent changes with a new CEO and how the company seems to be turning things around after a period of underperformance. The recent earnings report shows positive signs in sales volume and margins. However, they caution against expecting an immediate dividend hike as the new CEO may focus on stabilizing the company's financials first. Both participants have Unilever as a significant position in their portfolios and are not overly concerned about dividend cuts, given the company's historical practice of keeping dividends flat during challenging times and gradually raising them when performance improves.

Regarding Texas Instruments, they compare it to high-end companies like Nvidia, emphasizing that TI is known for its quality and reliability, akin to Siemens. They discuss the cyclical nature of the semiconductor industry and how TI is making substantial investments in its business, particularly in the development of three hundred-millimeter chips, to secure future revenue streams and stay competitive in the tech landscape.

They highlight challenges in the industry, such as recent chip shortages and weakening demand. Despite these challenges, they also recognize the vast opportunities TI has in growing technology trends like AI, IoT, and 5G.

When valuing TI, the discussion suggests using the dividend discount model (DDM) due to the variable cash flows resulting from heavy investments.

Overall, they view Texas Instruments as a strong business with growth potential. However, they urge caution with the entry point given the current risks. The European Dividend Growth Investor considers TI a top 10 stock in his portfolio and encourages the community to share their thoughts on Texas Instruments and any aspects they may have missed in the analysis.