Lam Research Stock Pays Out $30 Bil – Investors Take Note

In the last decade, Lam Research (LRCX) stock has returned $30 Bil back to its shareholders through cold, hard cash via dividends and buybacks. Let’s look at some numbers and compare how this payout power stacks up against the market’s biggest capital-return machines.

As it turns out, LRCX stock has returned the 91st highest amount to shareholders in history.

Why should you care? Because dividends and share repurchases represent direct, tangible returns of capital to shareholders. They also signal management’s confidence in the company’s financial health and ability to generate sustainable cash flows. And there are more stocks like that. Here is a list of the top 10 companies ranked by total capital returned to shareholders via dividends and stock repurchases.

Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Should you buy one stock you like or build a portfolio designed to win across cycles? Our numbers show that High Quality Portfolio has turned stock-picking uncertainty into market-beating consistency. This portfolio is incorporated in asset allocation strategy of Empirical Asset Management – a Boston area wealth manager and Trefis partner – whose asset allocation framework yielded positive returns during the 2008-09 period when the S&P lost more than 40%.

Top 10 Stocks By Total Shareholder Return

For full ranking, visit Buybacks & Dividends Ranking

What do you notice here? The total capital returned to shareholders as a % of the current market cap appears inversely proportional to growth prospects for reinvestments. Stocks like Meta (META) and Microsoft (MSFT) are growing much faster, in a more predictable way, compared to the others, but they have returned a much lower fraction of their market cap to shareholders.

That’s the flip side to high capital returns. Sure, they are attractive, but you have to ask yourself the question: Am I sacrificing growth and sound fundamentals? With that in mind, let’s look at some numbers for LRCX. (see Buy or Sell Lam Research Stock for more details)

Lam Research Fundamentals

• Revenue Growth: 23.7% LTM and 3.5% last 3-year average.
• Cash Generation: Nearly 29.4% free cash flow margin and 32.0% operating margin LTM.
• Recent Revenue Shocks: The minimum annual revenue growth in the last 3 years for LRCX was -14.5%.
• Valuation: Lam Research stock trades at a P/E multiple of 35.1
• Opportunity vs S&P: Compared to S&P, you get higher valuation, higher LTM revenue growth, and better margins

*LTM: Last Twelve Months

That’s a good overview, but evaluating a stock from an investment perspective involves much more. That is exactly what Trefis High Quality Portfolio does. It is designed to reduce stock-specific risk while giving upside exposure.

LRCX Historical Risk

That said, LRCX has shown it’s not immune to big sell-offs. It plunged about 75% during both the Dot-Com Bubble and the Global Financial Crisis. The inflation shock in 2022 hit it for around 56%. Even more recent events like the 2018 correction and the Covid sell-off knocked it down nearly 45% each. Strong fundamentals matter, but when fear hits, LRCX can still take a serious hit.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read LRCX Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.