Understanding the Implications of Intel Corp's Upcoming Dividend
Intel Corp (INTC, Financial) recently announced a dividend of $0.13 per share, payable on 2024-03-01, with the ex-dividend date set for 2024-02-06. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Intel Corp's dividend performance and assess its sustainability.
What Does Intel Corp Do?
Intel Corp is a leading digital chipmaker, focused on the design and manufacturing of microprocessors for the global personal computer and data center markets. Intel pioneered the x86 architecture for microprocessors and was the prime proponent of Moore's law for advances in semiconductor manufacturing. Intel remains the market share leader in central processing units in both the PC and server end markets. Intel has also been expanding into new adjacencies, such as communications infrastructure, automotive, and the Internet of Things. Further, Intel Corp expects to leverage its chip manufacturing capabilities into an outsourced foundry model where it constructs chips for others.
A Glimpse at Intel Corp's Dividend History
Intel Corp has maintained a consistent dividend payment record since 1992, with dividends currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Intel Corp's Dividend Yield and Growth
As of today, Intel Corp currently has a 12-month trailing dividend yield of 1.74% and a 12-month forward dividend yield of 1.17%. This suggests an expectation of decreased dividend payments over the next 12 months. Over the past three years, Intel Corp's annual dividend growth rate was -17.50%. Extended to a five-year horizon, this rate increased to -5.40% per year. And over the past decade, Intel Corp's annual dividends per share growth rate stands at 2.50%.
Based on Intel Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Intel Corp stock as of today is approximately 1.32%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Intel Corp's dividend payout ratio is 0.71, which may suggest that the company's dividend may not be sustainable.
Intel Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Intel Corp's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
Intel Corp's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Intel Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Intel Corp's revenue has increased by approximately -11.20% per year on average, a rate that underperforms approximately 88.94% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. However, during the past three years, Intel Corp's earnings have decreased by approximately -41.00% per year on average, a rate that underperforms approximately 93.94% of global competitors. Additionally, the company's 5-year EBITDA growth rate of -26.10%, underperforms approximately 96.55% of global competitors.
Next Steps
Intel Corp's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics present a mixed picture for investors. While the company has a history of consistent dividend payments and a good profitability rank, the negative growth rates in revenue, earnings, and EBITDA raise concerns about the long-term sustainability of its dividends. Investors should weigh these factors carefully while considering Intel Corp as part of their dividend investment strategy. For those looking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener to identify potential opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
