Yahoo Finance What To Know Before Buying Intel Corporation (NASDAQ:INTC) For Its Dividend
Intel Corporation (NASDAQ:INTC) has pleased shareholders over the past 10 years, by paying out dividends. The stock currently pays out a dividend yield of 2.7%, and has a market cap of US$206.9b. Let’s dig deeper into whether Intel should have a place in your portfolio.
See our latest analysis for Intel
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is its annual yield among the top 25% of dividend-paying companies?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Is is able to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Intel pass our checks?
Intel has a trailing twelve-month payout ratio of 40%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 30%, leading to a dividend yield of 2.8%. However, EPS should increase to $4.07, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of INTC it has increased its DPS from $0.56 to $1.2 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes INTC a true dividend rockstar.
Relative to peers, Intel generates a yield of 2.7%, which is high for Semiconductor stocks but still below the market’s top dividend payers.
Next Steps:
Taking into account the dividend metrics, Intel ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three fundamental factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for INTC’s future growth? Take a look at our free research report of analyst consensus for INTC’s outlook.
Valuation: What is INTC worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether INTC is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
