Applied Materials to Pay Dividend - TheStreet

Applied Materials

(AMAT) - Get Report

initiated a 3-cent quarterly dividend Wednesday and authorized a $4 billion share repurchase, replacing a $3 billion plan that had been about one-third exercised.

The first dividend will be paid June 8 to stock of record May 18. With about 1.6 billion shares outstanding, the dividend will cost the chip-equipment maker about $200 million a year. Applied Materials earned about $1.56 billion in the 12 months to Jan. 31.

"Our business is generating strong free cash flow which we are using to fund the growth of our business through technology leadership, entry into new markets, service expansion and acquisitions," the company said. The dividend "is further evidence of our commitment to a balanced approach to capital allocation and returning value to stockholders."

At a recent price of $16.25, Applied Material's stock now carries a dividend yield of roughly 0.7%.

Four billion dollars would buy about 240 million Applied Material shares at the current price. The company's board terminated a $3 billion stock repurchase program authorized in March 2004. The company bought back In about 55 million shares at an average price of $17.23 a share under the old plan.

Rival chip-equipment company

KLA-Tencor

(KLAC) - Get Report

initiated

its own 12-cent dividend Feb. 14, payable June 1.

Shares of Applied Materials, which is expected to provide a business update after the bell, were up about 2.7% Wednesday afternoon.