Chip giant Qualcomm (QCOM -1.75%) is simply thriving. It's benefiting hugely from the global smartphone boom. Technology industry research group IDC earlier this year predicted that global smartphone shipments would top 1 billion units in 2014. And, in August, IDC stated that worldwide smartphone shipments topped 300 million in the second quarter, the first time that quarterly mark had been hit. That represents 25% growth from the same period last year.

Qualcomm has seen its revenue and profits rise right along with the continued boom in global smartphone sales. The company rakes in a ton of cash flow, and it's returning a lot of that cash flow to investors through dividends and share repurchases.

Qualcomm's share repurchases backed by extremely strong fundamentals
Qualcomm spent $3.3 billion on share repurchases through the first three quarters of the fiscal year. That's a huge increase versus the $1.2 billion spent on share buybacks through the same period last year. In the fourth quarter of the fiscal year, Qualcomm management stated it intends to repurchase at least $1 billion of stock. As of June 29, $6.5 billion remained on the company's authorized repurchase program.

Qualcomm can do this because it's growing very strongly. After releasing third-quarter results, Qualcomm Chief Executive Officer Steve Mollenkopf referred to the company's products as industry-leading chipset solutions. Judging by Qualcomm's performance, it's easy to agree with that assessment.

Through the first three quarters of the fiscal year, Qualcomm had generated $6.3 billion in free cash flow. This is up 15% versus the same period last year. Management expects 2014 to be a great year. Full-year expectations call for 6%-9% revenue growth and between 17%-21% earnings growth. This is due to rising shipments of its products, particularly in new markets. For example, Qualcomm sees China as a huge opportunity thanks to its developing 4G LTE rollout. Total shipments of Qualcomm's MSM chips soared 31% year over year in the most recent quarter. 

As a result of its cash generation, Qualcomm has a balance sheet that is flush with cash. At the end of the most recent quarter, Qualcomm reported $32.7 billion in cash, cash equivalents, and marketable securities. This provides a huge cushion for the company to increase the amount of cash it returns to shareholders.

More than enough cash to go around
One concern for income investors might be that the company is short-changing its dividend policy with such aggressive buybacks. But Qualcomm is in the rare position of generating enough cash to simultaneously buy back boatloads of stock, as well as pay a competitive dividend. Qualcomm has increased its dividend by 20% compounded annually over the past five years, and yields a very healthy 2.3%.

Qualcomm can afford to buy back stock and pay dividends, primarily because the company does not have overly burdensome investing needs. Capital expenditures totaled just $955 million over the first nine months of the year, meaning Qualcomm can keep investing to grow the business and also reward shareholders.

The Foolish takeaway
Qualcomm is in an enviable position. While some companies have to make hard choices between investing in the business to secure future growth, paying dividends, or buying back stock, Qualcomm is no such company. It's putting up enough growth to accomplish all of these initiatives to benefit shareholders.

As global smartphone shipments continue to rise, Qualcomm's cash flow keeps getting stronger. The company holds a mountain of cash on the books, and is deploying a lot of cash to investors. The primary way Qualcomm does this is by buying back billions of dollars' worth of stock, which will help boost earnings growth even more down the road. This is why shareholders should see Qualcomm's huge share buyback program as a great sign that business conditions are very positive, and getting stronger with each passing quarter.