MediaTek shares hit upper circuit after special dividend announcement

MediaTek shares surged to their upper circuit on Thursday, after the company announced a special dividend of NT$16. At an investor conference the day before, the IC designer was optimistic on its growth prospects due to rising demand for 5G chips. In a bold and unprecedented move, it announced plans to distribute a fixed bonus dividend of NT$16 per share for each of the next four years.

As soon as the market opened on Thursday, shares of IC designer MediaTek soared to limit-up at NT$1,185.

Amid rising demand for 5G, MediaTek reported revenue of NT$108 billion for the first quarter, with earnings per share at a record NT$16.21.

Voice of Rick Tsai
MediaTek CEO
We are working suddenly, already on 2022 capacity of supply. We are seeing healthy smartphone end-market demand and continue to believe global 5G smartphone shipments would exceed 500 million units this year.

With its prospects rosy, MediaTek has announced plans to pay a special annual dividend of NT$16 per share, in each of the next four years. This means that this year, it will pay a total of NT$37 instead of the original dividend of NT$21, taking the yield rate to 3%. For MediaTek founder Tsai Ming-kai, that''s a payout of NT$1.53 billion in dividends. MediaTek CEO Rick Tsai could earn NT$14.7 million and Deputy Chairman C. J. Hsieh NT$152 million.

Huang Wen-ching
Stock analyst
From this point of view, this move is equivalent to raising the payout ratio to more than 100%. Today, the firm''s shares went limit-up, which shows that everyone - and especially the market itself - approves and endorses the move. At the investor conference, they said that basically, the payout ratio will be maintained between 80% and 85% over the next three years.

In a bold and unprecedented move, MediaTek has set a baseline for its dividends over the next four years. In response, a foreign brokerage has raised its target price for MediaTek to a whopping NT$2,000. Amid the 5G revolution, MediaTek has turned in a stellar first-quarter performance, and it''s counting on special dividends to keep investors interested.