Be sure to consult Intel Corporation (NASDAQ: INTC) before it becomes ex-dividend



[ad_1]

Readers wishing to buy Intel company (NASDAQ: INTC) for its dividend will have to act shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the registration date which is the day on which shareholders must be entered in the books of the company to receive a dividend. It is important to know the ex-dividend date because any transaction in the share must have been settled by the registration date at the latest. Therefore, if you buy Intel shares on or after August 5, you will not be able to receive the dividend when it is paid on September 1.

The company’s upcoming dividend is US $ 0.35 per share, continuing the past 12 months when the company has distributed a total of US $ 1.39 per share to shareholders. Based on the value of last year’s payouts, Intel stock has a sliding return of around 2.6% on the current price of $ 53.72. Dividends are an important source of income for many shareholders, but the health of the business is critical to sustaining those dividends. So we need to determine if Intel can afford its dividend and if the dividend could increase.

See our latest analysis for Intel

Dividends are usually paid out of business income, so if a business pays more than it earned, its dividend is usually at risk of being reduced. Fortunately, Intel’s payout ratio is modest, at just 30% of profits. A useful secondary check can be to assess whether Intel has generated enough free cash flow to pay its dividend. Fortunately, she has only paid 34% of her free cash flow in the past year.

It is encouraging to see that the dividend is covered by both earnings and cash flow. This usually suggests that the dividend is sustainable, as long as profits don’t drop sharply.

Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.

historic-dividend

historic-dividend

Have profits and dividends increased?

Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold massively at the same time. Luckily for readers, Intel’s earnings per share have grown 13% per year for the past five years. Earnings per share are growing rapidly and the company keeps more than half of its profits in the business; an attractive combination that could suggest the company is focusing on reinvestment to further increase profits. Fast-growing companies that reinvest heavily are attractive from a dividend standpoint, especially since they can often increase the payout ratio later.

Most investors will primarily assess a company’s dividend prospects by checking the historical rate of dividend growth. Since starting our data 10 years ago, Intel has increased its dividend by about 8.2% per year on average. It’s encouraging to see the company raising its dividends as profits rise, suggesting at least some corporate interest in rewarding shareholders.

Last takeaways

Does Intel have what it takes to maintain its dividend payments? Intel has grown its profits at a rapid pace and has a cautiously low payout ratio, which means that it is reinvesting heavily in its business; a sterling combination. It is a promising combination that should mark this company worthy of further attention.

While it is tempting to invest in Intel purely for dividends, you should always be aware of the risks involved. Note that Intel displays 2 warning signs in our investment analysis, and 1 of them is potentially serious …

A common investment mistake is to buy the first interesting stock you see. Here you will find a list of promising dividend paying stocks with a yield above 2% and an upcoming dividend.

This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.

Do you have any feedback on this item? Are you worried about the content? Enter into a contract with us directly. You can also send an email to the editorial team (at) simplywallst.com.

[ad_2]

Source link