Skyworks Solutions (NASDAQ:SWKS | SWKS Price Prediction) and Qualcomm (NASDAQ:QCOM) both reported fiscal Q3 results in late July. Both companies pointed to weak handset demand and higher input costs. Their choices for income investors went in opposite directions. Skyworks ended its dividend to pay for the Qorvo (NASDAQ:QRVO) merger. Qualcomm kept paying while it works to replace phone revenue with cars and data centers.

Skyworks posted non-GAAP EPS of $1.08, well above the $0.65 consensus. It was the company’s fifth consecutive beat. Revenue slipped 3.1% to $934.8M. Management then said it would “not declare a quarterly dividend going forward.” That cash now goes to a new $2 billion buyback, paying down debt and acquisitions. It ends a payout that had rose from $0.11 in 2014 to $0.71 a quarter.

Free cash flow came in at negative $16.7M after a $133.3M inventory build ahead of the fall phone launches. Cash stands at $813.8M, compared with about $2B in planned deal debt. Customer concentration is the larger problem. The largest customer supplied about 57% of revenue, and any payout resting on one buyer is fragile.

Qualcomm’s revenue of $9.95B beat the $9.67B consensus. Non-GAAP EPS of $2.21 missed expectations of $2.22. Handset revenue fell 20%. Automotive jumped 61% to $1.588B, its 23rd straight quarter of double-digit growth. That is real diversification.

The quarterly dividend has higher from $0.53 in 2017 to $0.92 today. Apple (NASDAQ:AAPL) is the main risk. CFO Akash Palkhiwala expects “materially lower share” in Apple’s new launches and about a 50% drop in Apple-related revenue from September to December. He says non-handset growth “will replace the entire Apple product revenue within the year.”

I’m watching Qualcomm’s two custom-chip deals with hyperscalers, the giant cloud operators. Both should start producing revenue in the December quarter. Palkhiwala warned they will lower chip-segment gross margin by 1.5% to 2%. CEO Cristiano Amon admitted investors “want to see more proof points.” For Skyworks, everything depends on closing the Qorvo deal this calendar year and getting $500 million or more in cost savings.

Skyworks carries far more payout risk because it no longer pays one. Its shares are up 37.63% this year, so the market likes the merger plan. To me, that makes it a growth stock that depends on closing a deal and on one dominant customer. Qualcomm trades near 35 times earnings, and the loss of Apple business will hurt. Still, a 6.6% free cash flow yield and dividends going back to 2003 suggest the dividend has solid support. For retirement income, Qualcomm offers the better payout record of the two (we built a free guide on dividend ladders designed so retirees never have to sell a share, here).

Contact [email protected] for any questions or corrections.