By Geoffrey Seiler, BullMarket.com

Qualcomm (QCOM) continues to be the top chipmaker for high-end smartphones. Its best-in-breed technology is considered the only one to offer a complete processing solution that allows for all the features consumers are looking for (such as WiFi and GPS).

Meanwhile, the stock -- a selection on our Recommended List -- announced a new stock buyback program and an increase to its dividend.

The mobile chipmaker will up its quarterly distribution by 40% from 25 cents per share to 35 cents per share. The new dividend will be payable after March 27. The increase payout bumps its yield up to about 2.1%.

The company also implemented a new $5 billion stock buyback program effective immediately. It will replace a $4 billion repurchase program that had $2.5 billion remaining on it. The buyback has no expiration date.

Qualcomm is a very cash rich company, ending its fiscal Q1 with $28.4 billion in cash and investments and no debt, equal to about $16.22 per share. It also generated $1.98 billion in operating cash flow and $1.85 billion in free cash flow last quarter.

The move to return cash to shareholders is a good one, as it doesn't want to fall into the same trap as Apple and have a huge cash hoard for which it gets no credit. Our only complaint is that the company could have easily returned more.

All in all, we continue to think Qualcomm is a cheap stock (trading at about 10.7 times the FY14, ending September, consensus of $4.86 excluding its net cash) riding a strong trend of smartphone growth.

Its licensing business, which makes up about 75% of its revenue, is a virtual printing press that is benefiting from the shift to 3G/4G smartphones, with emerging markets becoming a meaningful growth driver, led by China and Latin America.

Through its impressive patent portfolio, the company generates a huge revenue stream that, importantly, is derived based on a percentage of revenue, not units sold, in most cases.

Thus, Qualcomm receives a royalty every time a consumer switches from a 2G phone to a 3G (or 4G) smartphone, even if it isn't the one providing the chips. We rate the stock a "Buy" with a $78 target.

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