In July, Analog Devices announced plans to acquire semiconductor company Maxim for more than $20 billion. Assuming the deal gains approval from regulators and shareholders, it is expected to close by the summer of 2021. From a dividend safety perspective, Analog Devices plans to maintain its existing dividend policy and will continue targeting 7% to 15% annual dividend growth. This guidance, coupled with our review of the combined company's financial health, leads us to reaffirm Analog Devices' Safe Dividend Safety Score.  From a strategic perspective, Analog Devices and Maxim are complementary businesses. Maxim designs and builds analog chips with a focus on serving the automotive and data center markets. Power management applications are a key focus area.

Shares of Cisco fell more than 11% on Thursday following the company's latest earnings release. Sales declined 9% last quarter, slightly better than expected, but management is not seeing a V-shaped recovery. CEO Chuck Robbins said the environment feels "very much like it felt 90 days ago" and provided guidance for a somewhat steeper revenue decline of 9% to 11% in the firm's current fiscal quarter, which runs through October. Cisco has spent the last few years shifting its business to emphasize more recurring software and services offerings, which accounted for 51% of revenue in fiscal 2020. However, more work is needed to better insulate the firm from cyclical swings in IT spending. Cisco's Infrastructure Platforms division (55% of sales), which [...]

On Tuesday, a federal appeals court issued Qualcomm a favorable ruling, reversing a May 2019 victory for the U.S. Federal Trade Commission which had accused the chipmaker of charging excessive royalty rates for its patents. The 2019 ruling threatened to disrupt the lucrative licensing practices that historically generated over 70% of the company's operating profits. As we discussed in December 2019, an unfavorable ruling had potential to harm Qualcomm's ability to pay dividends and invest in future technologies such as 5G. This week's news officially removes a worst-case outcome for Qualcomm's core licensing business model, stabilizing the firm's cash flow outlook going forward. In addition to its legal victory, Qualcomm in July resolved its royalty rate dispute with Huawei, the largest seller of smartphones in the world, [...]

PPL's stock rallied 5% today after the firm announced plans to initiate a process to sell its U.K. operations. PPL's U.K. utility business generated 52% of the company's 2019 segment earnings but faced an uncertain longer-term outlook. The current regulatory framework driving PPL's U.K. electricity distribution business ends in 2023, and Britain's energy regulators appear eager to reduce allowed returns at that time. This overhang, coupled with Brexit-related political instability and currency volatility, weighed on PPL's stock performance in recent years. Since 2017, PPL has seen its P/E ratio fall from an average near 16 to about 11 today. For context, the utility sector's average P/E ratio is about 17.5. Management believes they can create immediate shareholder value by fetching a sale price for [...]