INTC Intel Stock Analysis

 

It’s been a while since I published my last dividend stock analysis. I got busy launching the Dividend Growth Index and beating the stock market with my dividend stocks. So today, I’ll be analyzing Intel (INTC) in which I bought shares a few months ago. So I’m obviously going to tell you how great the company is ;-). Just kidding, I’ll actually tell you why I bought them!

 

INTC Company Profile

If you have a computer, chances are that there is an “Intel Inside”. Intel (INTC) is the largest designer, manufacturer and seller of “computer chips” in the world. Their microprocessors are well known and reliable. Their biggest competitor is definitely AMD (Advanced Micro Devices). But while they were knocking on Intel’s door a few years ago, INTC signed some important partnerships with computer builders to ensure its leader status in the microprocessor market.

 

Along with its microprocessors, INTC is also involved in producing flash memory products, motherboards and connectivity products. Basically, take a look at your electronic devices at home and you’ll find some of Intel’s products!

INTC Dividend & Company Metrics

TickerINTC
NameIntel Corp
Dividend Metrics
Current Dividend Yield3,02
5 year Dividend Growth13,95
1 year Dividend Growth19,17
Company Metrics
Sales Growth (1 year)24,19
Sales Growth (5 year)11,49
P/E ratio10,54
Margins growth1,93
Payout ratio30,56
Return on Equity25,16
Debt to Capital Ratio0,02

INTC Dangers & Opportunities

I guess the good news is that INTC is a fairly stable techno stock when compared to many other companies in this sector. Because of its size and the fact that everybody needs a computer, INTC first market (personal computer) is well protected (while not in a massive growth period!).

One of the key issues for Intel’s business is project evaluation. If the company doesn’t invest enough in R&D, its products quickly become obsolete. The good news is that Intel is sitting on a pile of cash and does not hesitate to provide their geniuses with the resources they need. However, it’s not always a great success. For example, INTC also entered the smartphone and tablet markets but with less success than with personal computers and laptops. Over time, this could be a problem.

 

INTC biggest competitive advantage is definitely its ability to spend more than anybody in the market when it comes to R&D. Since techno stocks are defined by their ability to evolve over time (we have 2 opposite great examples with Apple and RIM!), INTC should do well in the next decade… as long as they spend their money in the right places!

 

Final Thoughts on INTC

If you look at a long term graph of the stock (see below)

 

 INTC chart

You’ll notice that the stock hasn’t produced any yield for a shareholder. In fact, the stock has lost 6% over the past 10 years. Therefore, the only thing you can count on for this period was its dividend.  So at first glance, you might think that buying INTC is like buying a 3% bond (combined with a chance of losing a part of its value over 10 years!). However, considering its P/E ratio (10.54), it’s dividend payout ratio (under 30%) and obvious dividend increase policy by current management, INTC is showing some interesting attributes to be in any dividend portfolio. This is also why it is part of my picks for the Dividend Growth Index ;-).

 

Since I bought it, I made about 10% yield + a 4% dividend payout (based on the price I paid). However, I’ll be careful to see how the stock evolves over time and will follow its ability to gain market share in the tablet and smartphone industries.

 

Start Dividend Investing
Subscribe to our exclusive Dividend Mailing List and download your free Dividend Investing Guide
We hate spam just as much as you & will respect your privacy

Comments

  1. says

    I bought INTC in August based upon much of the analysis of dividend bloggers such as yourself. So far, I am pleased with the results although I do trade collars to mitigate risk of capital loss. Interestingly enough, I just bought a new laptop and looking at it while I type, I find that it has an AMD chip in it. Oops.

  2. says

    I also have INTC and think it is a great buy for dividend. They’ll have to increase dividend payout to keep up with the higher price though if they want to stay an attractive dividend stock.

  3. Mike says

    @Cashflowmantra,
    we probably have a similar cost then 😉 August was a great timing!

    @Retirebyforty,
    their low payout ratio is a great sign that they can easily increase their dividend. I guess they will try to maintain it around 4% and keep their payout ratio under 50%. Chances are they will always invest massively into R&D in order to keep their sales up.

  4. says

    I’ll join the INTC bandwagon (own some myself). I see it as particularly attractive when it dips below $20 as it tends to do over time. Like you though I am keeping an eye on how it handles the evolving platform environment before really backing up the truck on the stock.

  5. says

    I’m also long on INTC and I’m favorable on their long-term prospects. The massive R&D spending works to their advantage and the fairly high yield is attractive. I like them at the current price, but like them a lot more closer to $20. I think a lot of their future success will depend on their growth into the mobile/tablet industries, as you state. There is a lot of value to be had with this one.

    Good stuff!

  6. says

    Nice post!

    I’ve been thinking about this one for some time, don’t own it, but one of my dividend-investing rules is not investing in tech. MSFT and INTC have me thinking otherwise, but I need more utilities and energy companies first before I make the tech. plunge, me thinks.

    That said, INTC is a a great company, even if it does behave and probably will for some time, like a bond.

  7. says

    @My Own Advisor,
    I think that energy and utilities sector are great place to find good dividend stocks. Since I have already Husky, Chevron and 5N Plus, I’ve decided to look elsewhere.

    In regards to utilities, I think I will buy them when I’m about to retire as they don’t offer much growth perspective. It’s a pretty stable sector.

    Which stocks are you on your radar list right now?

Trackbacks

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>