Altium Limited (ASX: ALU) is one of the bigger tech shares on the ASX, with a market capitalisation of around $4.5 billion. But could it also be building a reputation as an ASX dividend share?
For readers who haven’t heard of Altium before, the company describes itself as a multinational software business that focuses on electronics design systems for 3D design and embedded system development. Its products are everywhere, “from world leading electronic design teams to the grassroots electronic design community.”
Some of its more well-known offerings include Altium Designer, Altium 365, NEXUS, and Octopart.
What are Altium’s dividend credentials?
The company has provided information about its dividend policy.
Altium says it is “committed to a progressive increase of long-term shareholder value.”
It has grown its dividend every year since October 2012, so it is close to a decade of consecutive annual dividend increases. In October 2012, it paid a dividend of 5 cents per share. In September 2021, the company paid a dividend of 21 cents per share.
Altium says it will determine the appropriate dividend payment to achieve dividend growth by considering three factors.
The first factor is its growth prospects and development profile.
Second, Altium will consider available cash flow and funding requirements.
The final factor is capital management and needs.
Altium’s board aims to pay ordinary dividends each year between 50% to 80% of net profit after tax (NPAT).
In the recent FY22 half-year result, it grew the interim dividend by 11% to 21 cents per share.
How is Altium planning to dominate its industry?
The ASX tech share says that its software tools empower and connect PCB (printed circuit board) designers, part suppliers and manufacturers to develop and manufacture electronic products faster and more efficiently.
A key focus of the business in recent times has been Altium 365, its cloud platform offering. The idea is that it can create “seamless collaboration” across the entire PCB design process.
The ASX tech share thinks that its industry has a long-term growth outlook.
The company notes that electronics are at the heart of ‘intelligent’ systems, while PCBs are central to the design and realisation of electronics and smart connected products.
Financial and operational goals
Altium is focused on the ‘rule of 50’. This is where the percentage of revenue growth plus the current earnings before interest, tax, depreciation and amortisation (EBITDA) margin is at least 50 each year. The company is committed to achieving double-digit revenue growth each year.
Over the next few years, the company is planning to scale significantly. By 2025, it is targeting $500 million of revenue and 100,000 Altium Designer subscribers.
In the six months to 31 December 2021, Altium grew revenue by 28% to US$102 million. The company said that it had 56,200 Altium Designer subscribers as of 7 February 2022.
Altium share price snapshot
Over the last year, the Altium share price has risen by more than 25%. However, that includes a decline since the start of 2022. This calendar year to date, Altium shares have dropped 23%.
The post Is Altium (ASX:ALU) building a reputation as an ASX dividend share? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison owns Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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