Universal Display Corporation OLED recently hiked its quarterly dividend payout by about 12.5% to 45 cents per share or $1.80 on an annualized basis. The news seemed to have struck the right chords with investors as OLED’s share price gained post its release.

Based on the closing price of $147.34 on Feb. 20, 2025, the proposed dividend affirms a modest yield of 1.22%. A steady dividend payout is part of Universal Display’s long-term strategy to provide attractive risk-adjusted returns to its stockholders. Additionally, healthy dividend increases at periodic intervals have been one of its key strengths.

Key Growth Drivers of OLED

Ewing, NJ-based Universal Display is a leading developer of technology and intellectual property (IP) for the Organic Light Emitting Diodes (“OLED”) market. OLEDs are thin, lightweight and power-efficient solid-state devices that emit light. This can be manufactured on flexible and rigid substrates, making them highly suitable for use in full-color displays and as lighting products.

Strong end-market demand presents a significant growth opportunity for Universal Display over the long term. OLED is suitable for commercial usage in a number of industries, including smartphones, television, virtual reality devices and automotive markets. Moreover, the increasing proliferation of smartphones, wearables and tablets is driving the adoption of small-area OLEDs. Large-area OLED displays are increasingly used in televisions. Further, unlike LEDs, OLEDs can be viewed directly and don’t need diffusers. It is also expected to be cost-effective when manufactured in high volumes, which makes it suitable for commercial application in the solid-state lighting market.

Universal Display’s dominance in OLED technology is primarily driven by its strong portfolio of around 6,000 patents worldwide. The company’s UniversalPHOLED phosphorescent OLED technology produces OLEDs that are four times more efficient than fluorescent OLEDs and significantly more efficient than current LCDs. This provides Universal Display with a competitive advantage over other OLED makers. 

Moreover, collaborations with leading centers of excellence like Princeton University, the University of Southern California, the University of Michigan and PPG Industries will continue to strengthen its patent portfolio in the long haul. The development of a blue phosphorescent emissive system is progressing steadily. Management expects the introduction of the entire series of red, green and blue phosphorescent emissive materials to open up several possibilities in a variety of OLED applications.

OLED's Zacks Rank

Universal Display currently has a Zacks Rank #3 (Hold). 

It has a long-term earnings growth expectation of 19.5% and delivered an earnings surprise of 9%, on average, in the trailing four quarters.

The favorable growth dynamics and sound financial management, which led to the quarterly dividend hike, offer enticing reasons to investors to stay invested for a steady dividend income.

Key Picks

Arista Networks, Inc. ANET, currently sporting a Zacks Rank #1 (Strong Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experiences. Arista delivered an earnings surprise of 14.8%, on average, in the trailing four quarters. It is well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations. You can see the complete list of today’s Zacks #1 Rank stocks here.

Juniper Networks Inc. JNPR, carrying a Zacks Rank #2 (Buy), is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help to build network infrastructure used for services and applications based on single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products. Juniper has a long-term earnings growth expectation of 12.4%. 

InterDigital, Inc. IDCC sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 15%. IDCC is a pioneer in advanced mobile technologies enabling wireless communications and capabilities. The company designs and develops a whole range of advanced technology solutions for use in digital cellular as well as wireless 3G, 4G, and IEEE 802-related products and networks.

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