Stock Analysis

Intel (NASDAQ:INTC) Is Increasing Its Dividend To US$0.36

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NasdaqGS:INTC
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Intel Corporation (NASDAQ:INTC) has announced that it will be increasing its dividend on the 1st of June to US$0.36. This will take the annual payment to 3.1% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Intel

Intel's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, Intel's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to fall by 38.6% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 51%, which is comfortable for the company to continue in the future.

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NasdaqGS:INTC Historic Dividend April 18th 2022

Intel Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from US$0.84 in 2012 to the most recent annual payment of US$1.46. This means that it has been growing its distributions at 5.7% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Intel has seen EPS rising for the last five years, at 17% per annum. Intel definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Intel's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Intel that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

What are the risks and opportunities for Intel?

Intel Corporation designs, develops, manufactures, markets, and sells computing and related products worldwide.

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Rewards

  • Price-To-Earnings ratio (15x) is below the US market (15.3x)

  • Earnings are forecast to grow 11.06% per year

Risks

  • Profit margins (12.7%) are lower than last year (25.5%)

  • Large one-off items impacting financial results

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