TSMC shares could return to prior ex-dividend level soon: Analyst

Taipei, June 10 (CNA) Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) will likely rebound to their prior ex-dividend level shortly after going ex-dividend on Thursday, driven by confidence in the company's strong fundamentals, an analyst predicted on Monday.

TSMC, the most heavily weighted stock in Taiwan, is expected to make up the cut in its share price caused by it going ex-dividend on Thursday, given the loss of NT$3.49978969 accounted for just 0.4 percent of the closing level of NT$879.00 (US$27.27) on Friday (June 7), Shin Kong Investment Trust Co. Chairman Quincy Liu (劉坤錫) told CNA.

Going ex-dividend refers to the date a stock starts trading without the value of its next dividend payment.

On Feb. 6, TSMC announced it would issue about NT$3.5 as a cash dividend per share following its earnings per share (EPS) of NT$9.21 recorded in the fourth quarter of last year. The ex-dividend date was scheduled for June 13.

In 2019, TSMC became the first company in Taiwan to start issuing cash dividends quarterly instead of annually with analysts saying such a change is expected to make investors more willing to hold onto the stock longer.

Since then, TSMC shares have returned to their prior ex-dividend levels in all 19 quarters. On 14 occasions they returned to the level in the same session, suggesting investors maintained their confidence in the stock.

Liu said TSMC has sound fundamentals and the market has widely forecast EPS will grow in 2024 and range between NT$38 and NT$39, compared with NT$32.24 in 2023.

Liu said TSMC shares are priced around 23 times their forecast earnings per share, which he says is reasonable.

On June 5, TSMC's board meeting approved a plan to buy back about 3.25 million shares priced between NT$598 to NT$1,281 between June 6 and Aug. 5. This is intended to offset the dilution from the increase of outstanding shares due to Employee Restricted Stock Awards (RSAs) issuance.

Liu said the planned share repurchase price range is expected to continue to help boost TSMC's share price.

On June 6, a day after the share buyback announcement, TSMC shares hit a historic intraday high of NT$899.00 before closing at NT$894.00.

In May, TSMC reported its third-highest monthly consolidated sales of NT$229.62 billion, up 30.1 percent from a year earlier.

During the April-May period, TSMC's consolidated sales totaled NT$465.6 billion. Analysts widely expect the chipmaker will achieve its second-quarter sales target of US$19.6 billion-NT$20.4 billion (NT$633.08 billion-NT$658.92 billion) or even beat the forecast due to strong demand for its advanced processes.

The chipmaker's second-quarter guidance is based on an exchange rate of NT$32.3 to US$1.

In an investor conference held in mid-April, it said sales were expected to grow 21-26 percent in 2024 from a year earlier, in U.S. dollar terms.

TSMC is scheduled to issue cash dividends valued at about NT$90.76 billion in total to its shareholders on July 11 for the fourth quarter earnings.

Former TSMC Chairman Mark Liu (劉德音), who owns 12.91 million TSMC shares, is expected to receive NT$45.18 million in cash dividends in July, while CEO C.C. Wei (魏哲家), who succeeded Liu last week, is expected to pocket NT$22.36 million from the 6.39 million TSMC shares he owns.

The National Development Fund under the Executive Yuan, the largest single shareholder of TSMC, is expected to receive NT$5.79 billion in cash dividends as the fund currently owns 1.65 billion shares of the company, or a 6.38 percent stake.