Updated 3/11/25
Monolithic Power Systems (MPWR) isn’t the first name that comes to mind for dividend investors, but that doesn’t mean it should be ignored. This semiconductor company specializes in high-efficiency power solutions, making its products essential for everything from cloud computing to electric vehicles. It has a strong reputation for innovation and consistent growth, which has translated into solid financials over the years.
Unlike traditional dividend stocks that offer high yields, MPWR’s appeal lies in its dividend growth and financial strength. It’s the kind of stock that rewards patient investors who are willing to watch their dividend income grow over time. If you’re looking for a balance of capital appreciation and rising payouts, this is one to keep an eye on.
Key Dividend Metrics
📈 Forward Dividend Yield: 1.07%
💰 Annual Dividend Rate: $6.24 per share
📊 Payout Ratio: 13.66%
🚀 5-Year Average Dividend Yield: 0.64%
📅 Next Dividend Date: April 15, 2025
🔻 Ex-Dividend Date: March 31, 2025
Dividend Overview
MPWR isn’t a high-yield stock, but it makes up for that with steady dividend increases. Right now, it has a forward dividend yield of 1.07%, which is actually higher than its 5-year average of 0.64%. That’s a sign that management is becoming more aggressive with dividend hikes, which is good news for long-term investors.
The annual dividend rate stands at $6.24 per share, up from previous years. The fact that MPWR has a payout ratio of just 13.66% means there’s plenty of room for future increases. Many dividend stocks pay out 50% or more of their earnings, so MPWR is in a great position to keep growing its dividend without putting strain on its finances.
Dividend Growth and Safety
The most exciting part of MPWR’s dividend story is its potential for long-term growth. While the yield isn’t huge, the company has been consistently increasing its payout, and with such a low payout ratio, there’s no reason to believe that trend will stop anytime soon.
Looking at cash flow, MPWR is in great shape:
- Operating Cash Flow (TTM): $788.41 million
- Levered Free Cash Flow (TTM): $500.98 million
These numbers show that MPWR generates more than enough cash to fund its dividend, reinvest in growth, and handle any unexpected economic downturns. On top of that, profitability metrics are strong, with a profit margin of 80.95% and an impressive return on equity of 68.78%.
With a business model that continues to expand in growing industries like AI, electric vehicles, and cloud computing, MPWR’s dividend growth looks very secure.
Chart Analysis
Looking at Monolithic Power Systems’ (MPWR) stock chart, there’s a clear shift in momentum that dividend investors and long-term holders should take note of. The stock experienced a significant run-up before encountering a steep decline, and it has struggled to regain its footing ever since.
Moving Averages and Trend Direction
The 50-day moving average (orange line) crossed below the 200-day moving average (blue line) several months ago, signaling a death cross—a classic bearish indicator that often suggests prolonged weakness. Since then, the price has remained below both moving averages, reinforcing the downtrend.
While there have been attempts at recovery, each rally has been met with resistance, particularly near the 50-day moving average. The most recent price action suggests that MPWR is still trading in a weak technical position.
Volume and Selling Pressure
Volume spikes tell an interesting story. There was a massive surge in selling volume when the stock began its steep decline, showing that institutions or large investors were offloading shares. Even though there have been occasional green volume bars, they haven’t been strong enough to reverse the trend.
Recent volume levels are relatively low, which could mean that selling pressure has eased, but there also isn’t a strong base of buyers stepping in to create a firm support level.
Relative Strength Index (RSI) and Momentum
The RSI at the bottom of the chart indicates that the stock has been in a weak momentum phase for some time. It dipped into oversold territory during the sharp decline, and while it recovered somewhat, it never reached overbought levels before rolling over again.
Right now, the RSI is hovering in a neutral-to-bearish zone, which suggests the stock isn’t seeing strong buying interest. Until the RSI starts pushing back toward higher levels, it’s hard to make a case for sustained upside.
Recent Price Action and Candlestick Behavior
Over the past five trading sessions, the price has been struggling to hold above the $600 level, which appears to be an important psychological resistance point. The last few candles show long upper wicks, indicating that buyers are trying to push the stock higher but are met with selling pressure each time.
The most recent candle closed near the session low, which typically isn’t a great sign for short-term momentum. Buyers weren’t able to maintain any gains throughout the day, and the stock finished near where it started. This kind of price action usually suggests uncertainty or a lack of conviction from bulls.
Support and Resistance Levels
There’s some minor support in the $570 range, but if that breaks, the next level to watch is closer to $550. On the upside, the first real resistance sits around $600, followed by the 50-day moving average near $640. Until the stock clears these hurdles, the broader trend remains under pressure.
Analyst Ratings
Monolithic Power Systems (MPWR) has recently been the focus of varied analyst opinions, reflecting both optimism and caution regarding its future performance.
📈 Upgrades
In November 2024, Loop Capital upgraded MPWR from a hold to a strong buy, setting a price target of $660. This upgrade was driven by the firm’s belief in MPWR’s robust growth prospects, particularly in the AI and cloud computing sectors. They highlighted the company’s consistent execution and potential for sustainable margin expansion as key factors supporting their bullish stance.
📉 Downgrades
Conversely, in October 2024, Rosenblatt Securities downgraded MPWR, adjusting their price target from $880 to $800. This downgrade stemmed from concerns about potential reductions in component orders from major clients, notably Nvidia. Reports suggested that Nvidia might decrease its purchases of MPWR’s components for its upcoming Blackwell platform, raising questions about MPWR’s revenue stability in that segment.
🎯 Consensus Price Target
As of early 2025, the consensus among analysts is a moderate buy rating for MPWR, with an average price target of approximately $866.17. This consensus reflects a balanced view, acknowledging both the company’s growth potential and the challenges it may face in maintaining its market position amidst a competitive semiconductor landscape.
Earnings Report Summary
Monolithic Power Systems (MPWR) just released its latest earnings report, and there’s a lot to unpack. The company wrapped up a strong quarter, showing impressive revenue growth and solid financial performance across the board.
Fourth Quarter Performance
MPWR brought in $621.7 million in revenue for the fourth quarter, marking a healthy 36.9% increase from the same time last year. The company’s gross margin held steady at 55.4%, showing that even with inflationary pressures and supply chain challenges, profitability remains strong.
Operating expenses ticked up to $181.1 million on a GAAP basis, reflecting investments in research, development, and expansion. Despite that, operating income saw a notable increase, landing at $163.3 million under GAAP accounting and $220.7 million on a non-GAAP basis.
One of the biggest headlines from the report was the sharp increase in net income. The company posted an eye-catching $1.4 billion in GAAP net income, but much of that was due to a one-time tax benefit. Stripping that out, the non-GAAP net income came in at $198.4 million, a solid jump from last year’s $140.9 million.
Full-Year Highlights
For the entire year, MPWR reported $2.2 billion in revenue, reflecting 21.2% growth compared to 2023. The gross margin remained strong at 55.3%, though it was slightly lower than the prior year’s 56.1%. Operating income climbed as well, with GAAP figures at $539.4 million and non-GAAP at $764.1 million.
Net income came in at $1.8 billion for the full year, translating to $36.59 per diluted share. Adjusted for one-time items, non-GAAP net income hit $689.8 million, or $14.12 per share—both notable improvements over 2023.
Revenue by Business Segment
MPWR saw growth across its key markets:
- Enterprise data revenue hit $194.9 million, significantly up from $128.9 million the year before
- Storage and computing reached $136.5 million, climbing from $117.3 million
- Automotive sales surged to $128.3 million from $89.8 million
- Communications revenue jumped to $63.8 million from $40.9 million
- Consumer electronics brought in $57.3 million, up from $43.7 million
- Industrial revenue rounded out at $40.8 million, an increase from $33.4 million
Bigger Dividend Payout
Shareholders got some good news as MPWR announced a 24.8% boost to its dividend, raising it from $1.25 to $1.56 per share. The next payment is set for April 15, 2025, with the ex-dividend date on March 31, 2025. This increase signals confidence in the company’s cash flow and long-term outlook.
Looking Ahead
For the first quarter of 2025, MPWR is forecasting revenue between $610 million and $630 million, with gross margins expected to stay in the 55% range. Operating expenses are projected to remain relatively stable, reflecting continued investment in innovation.
CEO Michael Hsing emphasized that MPWR is evolving from just a semiconductor supplier into a broader technology solutions provider. With strong financials, increasing dividends, and a clear growth strategy, the company looks poised to keep moving forward despite some near-term industry headwinds.
Financial Health and Stability
One of MPWR’s biggest strengths is its rock-solid balance sheet. Unlike many companies that rely on debt to fund operations, MPWR keeps things incredibly clean financially.
- Total Cash (MRQ): $862.95 million
- Total Debt (MRQ): $15.79 million
- Current Ratio: 5.31
- Debt-to-Equity Ratio: 0.50%
That last number is especially telling. A debt-to-equity ratio of 0.50% is almost unheard of, especially in the tech sector, where many companies take on massive amounts of debt. MPWR’s ability to grow while keeping debt levels this low is a huge advantage. It means there’s little risk of a financial squeeze that could force the company to cut dividends or slow down growth.
On the revenue side, things look just as strong. MPWR saw a 36.9% year-over-year increase in revenue, proving that it’s still in expansion mode despite the broader challenges facing the semiconductor industry.
Valuation and Stock Performance
At its current price of $570.35 per share, MPWR isn’t exactly a bargain stock. The forward price-to-earnings ratio stands at 34.48, which is high compared to the overall market but reasonable for a high-growth tech company.
One thing that stands out is how much the stock has dropped from its 52-week high of $959.64. That’s a steep decline of around 40%, and it currently trades below both its 50-day moving average ($636.21) and its 200-day moving average ($757.47). That signals a downtrend, but for long-term investors, this pullback could be an opportunity to get in at a more reasonable valuation.
The stock’s enterprise value-to-EBITDA ratio of 46.92 is on the high side, meaning investors are still pricing in a lot of future growth. That’s always a risk, but MPWR has a track record of meeting expectations, which helps justify the premium valuation.
Risks and Considerations
No stock is without risks, and MPWR is no exception.
- Semiconductor Cyclicality – The chip industry is notorious for its boom-and-bust cycles. When demand is high, companies thrive, but downturns can be brutal.
- High Valuation – Even after the recent selloff, MPWR is still expensive compared to other dividend stocks. Investors need to have a long-term mindset.
- Low Current Yield – At just over 1%, MPWR’s dividend won’t provide a meaningful income stream in the short term. It’s better suited for investors focused on dividend growth rather than immediate yield.
- Economic Headwinds – As a tech company, MPWR is sensitive to interest rates, inflation, and global economic trends. Any slowdown in corporate spending could impact growth.
Despite these risks, MPWR’s financial strength provides a strong buffer against market turbulence.
Final Thoughts
MPWR may not be a traditional dividend stock, but it has a lot to offer for investors willing to take a long-term approach.
- The company is committed to dividend growth, and with a low payout ratio, there’s plenty of room for future increases.
- It has one of the strongest balance sheets in the industry, with almost no debt and a massive cash reserve.
- While the valuation is still high, the recent price pullback has made the stock more attractive.
For investors looking for a mix of capital appreciation and growing dividends, MPWR is an interesting option. It won’t provide the highest immediate yield, but over time, it has the potential to become a strong income-generating investment.