⚠ Not Covered Since 2022High threat

Texas Instruments (TXN) — threat to the moat

The dividend has not been covered since 2022, and a board with a 23-year record does not treat a pause as neutral.

A dividend that has not been covered by free cash flow since 2022 is a record being maintained on the balance sheet.

Four years uncovered23consecutive yearsof increases$1.42quarterly dividendper share1.7xdividend againstfree cash flow4consecutiveyears above itGuidance of $2-3bn capex for 2026 would close the gap immediately.
The least flexible line in the capital plan.

TI paid $5.00 billion of dividends and repurchased $1.48 billion of stock in 2025 — $6.48 billion — against free cash flow of $2.94 billion, issuing $1.20 billion of long-term debt in the same year.1 The dividend alone was roughly 1.7 times free cash flow, and 2025 was the fourth consecutive year of that pattern.

The 23-year record of increases is precisely why the choice was made this way.2 A board that has raised the dividend every year since 2004 does not treat a pause as a neutral option, which means the payout is the least flexible line in the capital plan.

The bridge is the capex cliff: guidance of $2–3 billion for 2026 from $4.55 billion would close the gap immediately.3

The risk is a downturn arriving before it does, which would force a choice between the record and the leverage.

Watch dividends paid against free cash flow. It is the covered-or-not test, and it has failed for four years.

References
  1. ReportedTI paid $5.00 billion of dividends and repurchased $1.48 billion of stock in 2025 — $6.48 billion — against free cash flow of $2.94 billion, issuing $1.20 billion of long-term debt in the same year.
    Texas Instruments Incorporated, Form 10-K FY2025 — Management's Discussion and Analysis, cash flow statement and the free-cash-flow reconciliation. Cash flow from operations $7,153M (2024 $6,318M), 40.5% of revenue; capital expenditures $4,550M (2024 $4,820M); proceeds from CHIPS Act incentives $335M; free cash flow $2,938M (2024 $1,498M), 16.6% of revenue. In 2025 TI invested $3.94bn in R&D and SG&A, invested $4.55bn in capital expenditures and returned $6.48bn to shareholders. Dividends paid were $4,999M against $4,795M in 2024 and $4,557M in 2023, reflecting an increased dividend rate; $1,477M was used to repurchase 8.5 million shares against $929M for 4.7 million shares in 2024. Net proceeds of $1,199M were received from the issuance of fixed-rate long-term debt and $750M of maturing debt retired. Over the ten-year period from 2016 to 2025 TI allocated $109 billion, of which about $24 billion went to capital expenditures, and states it is near completion of its six-year elevated capital expenditure cycle. The dividend was raised 4% to $1.42 per share per quarter, marking 22 consecutive years of increases, since extended to 23. The One Big Beautiful Bill Act, enacted 4 July 2025, provided for expensing of US research and eligible capital expenditure and increased the CHIPS Act investment tax credit; TI expects the effective tax rate and tax-related cash payments to be lower than under prior law from 2026. — FY2025 · publ. 2026-02-06 · source ↗
  2. ReportedThe 23-year record of increases is precisely why the choice was made this way.
    Texas Instruments Incorporated, Form 10-K FY2025 — Management's Discussion and Analysis, cash flow statement and the free-cash-flow reconciliation. Cash flow from operations $7,153M (2024 $6,318M), 40.5% of revenue; capital expenditures $4,550M (2024 $4,820M); proceeds from CHIPS Act incentives $335M; free cash flow $2,938M (2024 $1,498M), 16.6% of revenue. In 2025 TI invested $3.94bn in R&D and SG&A, invested $4.55bn in capital expenditures and returned $6.48bn to shareholders. Dividends paid were $4,999M against $4,795M in 2024 and $4,557M in 2023, reflecting an increased dividend rate; $1,477M was used to repurchase 8.5 million shares against $929M for 4.7 million shares in 2024. Net proceeds of $1,199M were received from the issuance of fixed-rate long-term debt and $750M of maturing debt retired. Over the ten-year period from 2016 to 2025 TI allocated $109 billion, of which about $24 billion went to capital expenditures, and states it is near completion of its six-year elevated capital expenditure cycle. The dividend was raised 4% to $1.42 per share per quarter, marking 22 consecutive years of increases, since extended to 23. The One Big Beautiful Bill Act, enacted 4 July 2025, provided for expensing of US research and eligible capital expenditure and increased the CHIPS Act investment tax credit; TI expects the effective tax rate and tax-related cash payments to be lower than under prior law from 2026. — FY2025 · publ. 2026-02-06 · source ↗
  3. ReportedThe bridge is the capex cliff: guidance of $2–3 billion for 2026 from $4.55 billion would close the gap immediately.
    Coverage of Texas Instruments' second-quarter 2026 results, July 2026 — revenue of $5.46 billion, up 23% year over year and 13% sequentially against consensus near $5.24 billion; net income of $1.98 billion, up 53%, and EPS of $2.14, up 52% and above the high end of guidance. By segment, Analog revenue was $4.37 billion (up 26%), Embedded Processing $788 million (up 16%) and Other $310 million (down 2%). Industrial revenue grew more than 30% year over year across all sectors and regions, automotive re-accelerated, and data centre revenue roughly doubled. Management guided third-quarter revenue to $5.65-6.15 billion and confirmed 2026 capital expenditure of $2-3 billion, declining to bias the range toward the lower end. After holding pricing flat through the first half, TI began executing customer-by-customer price increases from the third quarter, extending into the fourth quarter and into 2027, concentrated in Analog. Management has framed free cash flow per share of $8 or more as probable for 2026, having earlier suggested $12. The shares fell after hours. — Q2 2026 · publ. 2026-07-24 · source ↗
Sources
Generated September 23, 2026