[ad_1]
It looks like Intel company (NASDAQ: INTC) is set to be ex-dividend within the next four days. The ex-dividend date is a business day before a company’s registration date, which is the date the company determines which shareholders are entitled 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. Thus, you can buy Intel shares before August 5 in order to receive the dividend that the company will pay on September 1.
The company’s next dividend will be US $ 0.35 per share. Last year, in total, the company distributed US $ 1.39 to shareholders. Based on the value of last year’s payouts, Intel has a rolling 2.6% return on the current price of $ 53.72. We love to see companies pay a dividend, but it’s also important to make sure that laying the golden eggs is not going to kill our goose that lays the golden eggs! 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 generally paid out of company profits. If a company pays more dividends than it has made a profit, then the dividend could be unsustainable. That’s why it’s good to see Intel donate a modest 30% of its revenue. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we always need to check if the dividend is covered by the cash flow. Fortunately, she has only paid out 34% of her free cash flow in the past year.
It is positive to see that Intel’s dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a larger margin. security before the dividend is cut.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Companies with consistently increasing earnings per share usually make the best dividend-paying stocks because they generally find it easier to increase dividends per share. If business goes into recession and the dividend is reduced, the business could experience a sharp drop in value. For this reason, we are happy to see that Intel earnings per share have grown 13% per year over 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.
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Since our data began 10 years ago, Intel has increased its dividend by around 8.2% per year on average. We are happy to see dividends growing alongside earnings over multiple years, which may be a sign that the company intends to share the growth with its shareholders.
The bottom line
Is Intel an attractive dividend-paying stock, or better left off the shelf? We like the fact that Intel is increasing its earnings per share while simultaneously paying a small percentage of its earnings and cash flow. These characteristics suggest that the company is reinvesting in growing its business, while the prudent payout ratio also implies reduced risk of dividend reduction in the future. There’s a lot to like about Intel, and we’d prioritize taking a closer look.
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 makes us a little uncomfortable …
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.
Promoted
If you decide to trade Intel, use the cheapest platform * which is ranked # 1 overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, currencies, bonds and funds in 135 markets, all from one integrated account.
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 documents. Simply Wall St has no position in the mentioned stocks.
*Interactive Brokers Ranked Least Expensive Broker By StockBrokers.com Online Annual Review 2020
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